7.  Mr Khodorkovskiy (the first applicant) was born in 1963. He is currently serving a prison sentence in a penal colony in the Karelia Region. Mr Lebedev (the second applicant) was born in 1956 and is now serving a prison sentence in the Yamalo-Nenetskiy Region.
8.  The first applicant is the former head and one of the major shareholders of Yukos Plc, which at the relevant time was one of the largest oil companies in Russia. Before working in Yukos Plc, he was a senior manager and co-owner of the Menatep bank and the Rosprom holding (an industrial holding affiliated with Menatep) and controlled a number of other financial and industrial companies. In particular, he was the Head of the Executive Board of Yukos-Moskva Ltd and later its President. Further below the group of companies affiliated with Yukos will be referred to as “Yukos”.
9.  The second applicant was the first applicant’s business partner and a close friend. In 1990s the second applicant was the chief executive of the Menatep bank and a top-manager of the Rosprom holding. From 1998 the second applicant worked as a one of the directors of Yukos-Moskva Ltd. He was also one of the major shareholders of Yukos.
10.  Yukos was created as a result of the mass privatisation of the State oil and mining industry which took place in the mid-1990s. Following privatisation, new management techniques were introduced and the companies acquired by Yukos were reorganised. In particular, sales of the producing companies were re-directed to new trading companies. As a result, Yukos became one of the most successful businesses in Russia, and the first applicant was mentioned in the press as one of the richest persons in Russia.
11.  Amongst other acquisitions by Yukos in the course of the privatisation were 20 per cent of the shares of a large mining company, Apatit Plc (hereinafter referred to as “Apatit”), a major supplier of the apatite concentrate in the country. The acquisition of Apatit shares gave rise to litigation in which the State Property Fund opposed Yukos. The former claimed that Yukos had failed to meet its obligations under the privatisation agreement. That litigation ended in 2002 with a friendly settlement: the State Property Fund accepted a termination fee while acknowledging the rights of Yukos to 20 per cent of Apatit shares.
12.   Most of the Yukos produce was sold abroad. However, Yukos did not trade directly with foreign firms but sold its output to several Russian companies (“trading companies”) registered in the zones with special tax regime, in particular in the town of Lesnoy, situated in the Sverdlovsk region in the Urals (also referred to as the “ZATO”, an abbreviation translated as “closed administrative territorial formation”). Special taxation in Lesnoy was established by the Federal Law “On Closed Administrative-Territorial Entities” of 14 July 1992 (the “ZATO Act”). The ZATO Act was supposed to attract investors to economicly depressed areas and foster economic growth there.
13.  Such mode of operation persisted for several years; Yukos trading companies were operating on the basis of “preferential taxation agreements” with the administration of the Lesnoy town. Those agreements were renewed every year since 1998. Thus, for example, on 28 January 2000 the town administration concluded a preferential tax agreement with Business Oil Ltd (hereinafter referred to as “Business Oil”), the main trading company of Yukos in Lesnoy, providing it, amongst other tax cuts, a 75 per cent reduction of the “local” part of the corporate income tax (i.e. of the part destined for the local budget). Under that agreement Business Oil was supposed to transfer a certain amount of money to the town budget (5 per cent of the amount of tax cuts obtained). A major part of the profits of Business Oil and other trading companies were later transferred on a gratuitous basis in the form of investments in the “fund for financial support for production development”, which was founded within Yukos on the basis of a resolution of the Board of Directors.
14.  In addition to obtaining tax cuts, the trading companies registered in the low-tax zones paid some of their taxes not with money but with promissory notes issued by Yukos. Those notes were accepted by the local authorities as a method of payment of taxes and were later honoured by Yukos. The trading companies also enjoyed VAT exemption in respect of the oil they were selling abroad. VAT was reimbursed in monetary form from the State budget to the bank accounts of those companies. Tax audits carried out in 1999 confirmed the eligibility of Business Oil for tax cuts.
15.  The applicants’ personal income consisted of the salaries they received from Yukos and the dividends from the Yukos shares they owned. In addition, both applicants earned substantial amounts of money as self-employed contractors (or “individual entrepreneurs”, in the Russian terminology), by providing consulting services to foreign firms. As “individual entrepreneurs” the applicants were entitled to preferential taxation under the Law “On Simplified Form of Taxation, Accounting and Reporting for Small Businesses” (No. FZ-222, 29 December 1995, the “Small Business Act”).
16.  In 2003 the office of the General Prosecutor of the Russian Federation (hereafter “the GPO”) started a criminal investigation into the business activities of Mr Khodorkovskiy and his partners. The charges against the applicants originally concerned fraudulent acquisition of Apatit and another firm during the mass privatisation of 1990s. Later the GPO charged the applicants with large-scale tax evasion. In particular, the GPO suspected that the trading companies registered in the low-tax zones were in fact sham legal entities (podstavnye, i.e. “frontman companies”; hereinafter referred to as “sham companies”) affiliated with the applicants, as they were neither present nor operated in the place of their registration, had no assets and no employees of their own but were fully controlled from the Yukos head-quarters in Moscow. Therefore, tax cuts had been obtained by them unlawfully. The tax authorities also characterised payment of taxes with promissory notes as tax evasion. Furthermore, the tax authorities suspected that the firms to which the applicants, in their private capacity, had been rendering consulting service were affiliated with them and that no services had been provided to those firms in reality.
17.  In 2003 both applicants were arrested and detained on remand. That investigation led to a trial which ended with the conviction and imprisonment of the applicants. Facts related to this trial (the “first case”) are at the heart of the present case. The applicants’ prison terms have now expired; however, they both remain in prison on account of new accusations brought against them within related but separate court proceedings (the “second case”).
18.  In parallel with criminal proceedings against the applicants the Russian Tax Service[1] in 2004 lodged a claim for tax arrears owed by Yukos, which led to proceedings before the Moscow Commercial Court. Those proceedings concerned the operation of the “tax-minimisation scheme” using trading companies, described above. In the following months more claims concerning the tax situation of Yukos and its affiliates were lodged. The commercial courts granted most of the Tax Service’s claims. As a result Yukos had to declare itself insolvent and bankruptcy proceedings were started, which ended up by a forced sale of its assets and, finally, by the liquidation of the company on 12 November 2007. The company ceased to exist, leaving over RUB 227.1 billion (around 9.2 billion US dollars (USD)) in unsatisfied liabilities. For further details on the tax claims and Yukos bankruptcy see the statement of facts in the case of OAO Neftyanaya kompaniya YUKOS v. Russia (no. 14902/04, judgment of 20 September 2011), hereinafter referred to as the Yukos case.
19.  In 2004 and in the following years similar tax claims (related to the operation of trading companies in various low-tax zones within Russia) were lodged against at least three other major oil companies, namely Lukoil, Sibneft, or TNK-BP. However, in respect of those companies the Government ultimately accepted a settlement; tax claims were dropped in exchange of considerable amounts paid by those companies to the State budget, which allowed those companies to survive.
20.  The applicants alleged that the criminal proceedings against them, described below, had been politically and economically motivated. In support of that assertion they referred to a large number of events which preceded the criminal proceedings against them and their partners. Those facts, in so far as relevant, are summarised below.
21.  In 2002-2003 Yukos began to pursue a number of ambitious business projects which would make it one of the strongest players on the market and independent of the State. In particular, Yukos challenged the official Russian petroleum policy of tacit alignment with the OPEC policy of reducing oil production. Yukos sought instead to maximise its oil production and market share. Further, from 2003 Yukos was in the process of merging with Sibneft, another large Russian oil company. The merger was supposed to take place in two steps: firstly, completion of the deal on paper, and then unification of the new company’s management structures. The first aspect of the deal was finalised in October 2003; the second was supposed to be implemented by January 2004. Yukos was also engaged in merger talks with the US-based Exxon Mobil and Chevron Texaco companies. According to the applicants, Chevron Texaco was considering the purchase of 25 per cent of Yukos shares, while Exxon Mobil planned to buy at least 40 per cent of the future Yukos Sibneft company.
22.  Yukos was also planning to build a liquid gas pipeline to the Arctic Ocean in order to export natural gas to the western part of Europe without passing through the State-controlled pipelines. Similar plans existed in respect of China; here the applicants advocated building an oil pipeline along an alternative route to that favoured by the Presidential Administration.
23.  Finally, Yukos and the State-owned company Rosneft were involved in a public struggle for control over certain oil fields. Yukos was successfully competing with Gazprom, another State-owned company, on the natural gas market.
24.  In 2000 Mr Putin was elected President of the Russian Federation. One of the points of his political programme was to “liquidate the oligarchs as a class”. Furthermore, President Putin advocated, according to the applicants, the renationalisation of the oil and mining industries, which had been privatised by his predecessor in the mid-90s.
25.  In 2001 the first applicant founded a non-profit NGO, the “Open Russia Foundation”. Its annual budget in 2003 amounted to approximately USD 200 million. This NGO cooperated with other Russian human rights NGOs, such as Memorial, the Moscow Helsinki Group, etc., and was involved in a number of humanitarian and educational projects across the country.
26.  From at least 2002 the first applicant openly funded opposition political parties, namely Yabloko and the SPS (Union of Right Forces). He also made certain public declarations criticising anti-democratic trends in Russian internal politics. A number of his close friends and business partners became politicians. Thus, Mr Dubov and Mr Yermolin were members of the Duma (the lower chamber of the Russian parliament); Mr Shakhnovskiy, Mr Nevzlin, Mr Guryev and Mr Bychkov were all at various times members of the upper chamber, the Federation Council.
27.  The first applicant asserted that his political and business activities had been perceived by the leadership of the country as a breach of loyalty and a threat to national economic security. As a counter-measure the authorities undertook a massive attack on the applicant, his company, colleagues and friends.
28.  On 6 March 2001 Business Oil, the main trading company of Yukos in the Lesnoy town at the time, terminated its operations and was removed from the register of taxpayers of the Lesnoy town. Sales of Yukos oil were henceforth conducted through other trading companies registered in other low-tax zones.
29.  In July 2001 the Tax Service of the Sverdlovsk Region inspected the activities of the Lesnoy Tax Inspectorate. On 8 July 2001 it issued a report which established that tax cuts granted to Business Oil were lawful.
30.  In 2002 the administration of the Lesnoy town commissioned an economic study from the Urals Branch of the Russian Academy of Sciences which concerned operations of the trading companies registered in the town. The report (called “legal and economic expert review”) came to a conclusion that the impugned trading companies were all lawfully entitled to claim tax exemptions under the federal law relating to taxation in closed administrative territories. The experts also concluded that the refund of tax overpayments by Yukos promissory notes did not inflict economic loss on the budget and that the trading companies were entitled to pay tax in advance. Finally, the experts concluded that the Lesnoy town administration was entitled to accept tax payments by way of promissory notes in 1999.
31.  On 29 March 2002 a case was opened to investigate the acceptance by the Lesnoy town administration of tax payment by way of promissory notes from Yukos. That case was closed on 29 August 2002. The reasons why the case was closed were summarised by the GPO in July 2003 in the following terms:
“According to the conclusions of a legal and economic expert review of the case, there were no losses caused to the federal budget and municipal budget of Lesnoy town as a result of granting tax privileges, receiving taxes in the form of Yukos promissory notes and fulfilling the investment programme. Detected violations of the legislation by conducting these financial operations may be regarded as the subject matter of administrative and economic legislation. The receipt of taxes by way of promissory notes issued by Yukos was registered in the municipal budget for the 1999-2000 fiscal year, the federal budget received payment only in the monetary form”.
It is unclear whether the “legal and economic expert review” referred to by the GPO was the same as the report by the Urals Branch of the Russian Academy of Sciences prepared at the request of the town administration (see paragraph 30 above), or whether a different study was made at the request by the GPO.
(b)  Presidential Directive No. Pr-2178
32.  In November 2002 governors of several Russian regions wrote a letter to the then General Prosecutor of the Russian Federation, Mr Ustinov. In that letter they complained that Apatit was abusing its dominant position on the apatite concentrate market and boosting prices of phosphate fertilisers, which, in turn, increased food prices. They also alleged that Apatit was using various schemes to evade or minimise taxes. They urged General Prosecutor Ustinov to return Apatit to State control and to apply anti-trust measures in order to make Apatit reduce prices.
33.  In December 2002 the governor of the Pskov Region wrote to the then President of the Russian Federation, Mr Putin. He drew the President’s attention to the friendly settlement in respect of the Apatit shares (see paragraph 11 above) and claimed that its terms were contrary to the interests of the State, since the amount received by the State in pursuance to that settlement was significantly lower than the market price of the shares.
34.  On 16 December 2002 President Putin issued Directive No. Pr‑2178 requiring reports to be obtained in relation to whether there had been “violations of the existing legislation committed during the sale of shares of the Apatit and whether the State had suffered any loss as a consequence of the friendly settlement that had been approved by the Moscow Commercial Court in 2002”. The directive was addressed to Prime Minister Kasyanov and General Prosecutor Ustinov.
35.  On 19 February 2003 the first applicant, together with other influential businessmen, met President Putin in the Kremlin. At that meeting the first applicant made critical remarks concerning the recent acquisition of a private oil company by the State-owned company Rosneft. The first applicant implied that that transaction had involved high-level corruption. According to the first applicant, President Putin reacted by reminding the applicant that Yukos had experienced problems with the payment of taxes, which had not yet been fully resolved.
36.  On 27 April 2003 the first applicant met President Putin to discuss the merger between Sibneft and Yukos. According to Mr Dubov, the applicant’s business partner, Mr Putin approved the merger but warned the first applicant against political activity, namely funding the Communist Party.
37.  On 28 April 2003 General Prosecutor Ustinov reported to the President that there was no basis for a criminal case in relation to the circumstances surrounding the acquisition of a 20 per cent block of shares of Apatit. The inquiry had not established that Apatit had been abusing its position on the market or that the amount of the friendly settlement reached with the State privatisation agency had been unfair. The terms of the friendly settlement had been approved by the Prime Minister, Mr Kasyanov. Apatit’s tax payments had been constantly monitored by the Tax Service; although Apatit and its affiliates had been subjected to various penalties and financial sanctions in the past, and a new audit was underway, the GPO did not see any reason to start criminal proceedings in this respect. At the same time the Government insisted on the expediency of entering into an agreement with Yukos in order to settle the matter.
38.  On 29 April 2003 Prime Minister Kasyanov wrote to President Putin informing him that the law enforcement agencies had stated that they would not commence a criminal prosecution as there was no corpus delicti in relation to the circumstances surrounding the acquisition of a 20 per cent block of shares of Apatit.
(c)  The cases of Mr Pichugin and other senior managers of Yukos
39.  In one of his interviews in April 2003 the first applicant stated publicly that he intended to leave business and go into politics, and confirmed his funding of the SPS and Yabloko parties. He also said that some major Yukos shareholders supported the Communist Party.
40.  On 19 June 2003 a Yukos senior security official, Mr Pichugin, was arrested and charged with murder in an unrelated case. This arrest led to Mr Pichugin’s trial and conviction for murder (for a more detailed description of the facts of the case, see Pichugin v. Russia, no. 38623/03, 23 October 2012).
41.  In the following months several senior executives and shareholders of Yukos, namely Mr Nevzlin, Mr Dubov, Mr Brudno and several others left Russia out of fear of prosecution. Some lower-level Yukos managers or personnel of its contractors also left. Thus, according to the written testimony of Mr Glb., obtained in 2007, in 2003 the first applicant had met him and persuaded him to leave Russia. Later he had been told not to return to Russia. He understood that the security service of Yukos moved a part of its personnel to London. A staff member of one of the trading companies, Ms Kar., testified in 2008 that in 2003 a manager of Yukos persuaded her to leave Russia for Cyprus and paid for her stay there. The applicants, however, remained in the country and continued their professional activities.
42.  On 20 June 2003 the GPO initiated a criminal investigation into the privatisation of Apatit, which eventually led to charges being brought against the applicants.
43.  On 27 June 2003 the second applicant (Mr Lebedev) was summoned for questioning within the Apatit case. The questioning was scheduled for 10 a.m. on 2 July 2003.
44.  On 2 July 2003 the second applicant was admitted to Vishnevskiy Hospital in connection with his chronic diseases. At 9.50 a.m. Mr Drel, the second applicant’s lawyer, called the investigator and informed him that his client had been urgently hospitalised in an ambulance car. According to a certificate from the hospital the applicant was admitted there at 12.56 p.m. On the same day the GPO investigator accompanied by armed FSS (Federal Security Service) officers arrived at the hospital. At 3.20 p.m., the doctors, at the request of the investigator, examined the applicant. The doctors observed an improvement of his condition and described his condition as “satisfactory”. The second applicant was arrested as a suspect in the criminal case concerning the privatisation of Apatit and brought to the Lefortovo remand prison. According to the FSS officers present during the second applicant’s arrest, he threatened the investigator with criminal liability for his unlawful prosecution. He also threatened to bring a press campaign against the GPO officials involved in his case. In the following months the second applicant’s detention was repeatedly extended. For further details on the second applicant’s detention until November 2004 see Lebedev v. Russia, no. 4493/04, partial decision on admissibility of 25 November 2004, decision on admissibility of 18 May 2006, and judgment of 25 October 2007, hereinafter referred to as the Lebedev (no. 1) judgment.
45.  On 23 October 2003, whilst the first applicant was away from Moscow on a business trip to eastern Russia, chief investigator Karimov summoned him to appear in Moscow as a witness on the next day at noon. The first applicant’s staff informed the GPO that the first applicant was away from Moscow until 28 October 2003. On 24 October 2003, the first applicant having missed the appointment, the investigator Karimov ordered his enforced attendance for questioning.
46.  In the early morning of 25 October 2003 a group of armed law-enforcement officers approached the first applicant’s aeroplane on an airstrip in Novosibirsk, apprehended him, and flew him to Moscow. The first applicant was charged, arrested as a suspect and later detained on remand. For more details concerning the detention on remand of the first applicant see Khodorkovskiy v. Russia, no. 5829/04, §§ 22 et seq., 31 May 2011, hereinafter referred to as the Khodorkovskiy (no. 1) judgment.
47.  On 6 April 2004 the Meshchanskiy District Court decided that the second applicant should remain in detention pending trial. No reasons were given for that decision. On 15 April 2004 the District Court dismissed the application for release lodged by the defence. The court held as follows:
“[The court] takes into account that [the applicant] is accused of a number of offences, including serious ones, punishable with more than two years’ imprisonment. The combination of the seriousness of the charge and the information about the applicant’s character gives reason to suspect that, if released, the applicant may abscond from trial, interfere with the proceedings and influence witnesses. [In particular], the persons suspected of having committed the offences in concert with [the applicant] have gone into hiding. [The applicant] maintains international connections. [He] is accused of offences committed in his capacity as a manager of commercial companies. The persons with whose assistance, according to the investigating authorities, [the applicant] committed the offences, still work in the companies and depend on [him] financially and otherwise. [The applicant] may therefore influence them ...”
The District Court concluded that the second applicant should be kept in custody pending trial.
48.  On 19 August 2004 the second applicant’s lawyers lodged an application for release on behalf of the second applicant, referring, in particular, to his poor health. The District Court refused to release him, on the basis that the second applicant could receive adequate medical aid in the remand prison. The court also held that the second applicant’s continuous detention was justified in view of the gravity of crimes imputed to him, and “information about [the second applicant’s] character”. The District Court also noted that the persons with whose assistance the second applicant had allegedly committed the offences still worked in the companies and depended on him.
49.  At the hearing of 10 September 2004 the prosecutor requested the court to extend the second applicant’s detention on remand until 26 December 2004, since the previous detention order would expire on 26 September 2004. After that the defence declared that they needed to study the request and asked for a one-hour adjournment. The court gave the adjournment sought. An hour later the second applicant asked for one hour more to prepare a reasoned reply to the detention request. Again, the court granted that motion. At the end of the period the defence lodged a written reply to the prosecutor’s motion. The defence objected but the court granted the request and extended the second applicant’s detention on remand as requested. The reasons given by the District Court in its decision of 10 September repeated the reasons stated in the decision of 15 April 2004.
50.  The defence appealed. According to the Government, the brief of appeal against the extension order of 10 September 2004 was submitted on 20 September 2004. On 13 October 2004 the Moscow City Court upheld the decision of the lower court. The City Court noted that “the circumstances in which the imputed acts had been committed” suggested that, if released, the second applicant might pervert the course of justice by putting pressure on witnesses or otherwise influencing them, or might abscond, and that the City Court “had not discovered any reason to repeal the [lower] court’s decision as requested by the brief of appeal”.
51.  At the hearing of 14 December 2004 the prosecutor again requested an extension of the second applicant’s detention until 26 March 2005. That request was made orally. The defence was given two hours to prepare written submissions. The defence produced written arguments, following which the court granted the request and extended the detention until 26 March 2005, giving the same arguments as in the detention orders of 15 April and 10 September 2004.
52.  The appeal against the detention order of 14 December 2004 was lodged on 24 December 2004 and examined on 19 January 2005 when the Moscow City Court upheld it.
53.  At the hearing of 2 March 2005 the State prosecutor requested a new extension of the second applicant’s detention pending trial. The prosecutor referred to the second applicant’s oral statement of 1 March 2005, when he had said that he “would haunt the prosecutor until his last day”. In reply to the request the defence did not ask for additional time to prepare their arguments. The second applicant explained, in particular, that there had been nothing new in the prosecution’s requests for detention since 2003, and that he was prepared to give his arguments immediately. The court heard the defence and granted the request extending the second applicant’s detention until 26 June 2005. That detention order repeated the reasons given in the previous detention orders.
54.  The detention order of 2 March 2005 was appealed against on 11 March 2005; the first hearing was scheduled for 23 March, but the defence sought an adjournment in order to obtain a Ruling by the Constitutional Court of 22 March 2005 (no. 4-P). The appeal was therefore examined and dismissed on 31 March 2005.
55.  The second applicant claimed that in the remand prison IZ–77/1 where he had been detained from 21 October 2003 until his transferral to the correctional colony on 27 September 2005, he had been deprived of all physical exercise. Thus, he constantly missed his daily walks because of the need to read the materials in the case file or participate in the hearings. On weekends and holidays, when there were no court hearings he could not go outside because he was ill. Further, the food in the prison was incompatible with his illnesses, and he only received appropriate food from his relatives or lawyers to a limited extent. It was impossible to have a hot meal at midday when there was a hearing or when he was reading the case file. During the Christmas holidays the second applicant was transferred to an overcrowded “common” cell. Despite his requests, he was not given a calculator or a magnifying glass. As a result, he was able neither to prepare for the hearings nor to have a rest.
56.  The second applicant complained to the prison doctors about his health problems. On 2 March 2004 he was examined by a panel of doctors composed of the Chief Physician of the Moscow Health Department, Deputy Medical Director of the Moscow Prisons Department, Healthcare Director of the remand prison, and an infectiologist. The panel described his state of health as follows:
“[The applicant] is suffer[ing] from neuroculatory dystonia of the hypertensive type, chronic non-complicated sub-acute hepatitis, i.e. without transformation into cirrhosis and portal hypertension.”
57.  On 18 August 2005 the second applicant was placed in a solitary confinement cell (or “isolation cell”) as a punishment, allegedly for refusing to go outside for a daily walk. The documents produced by the Government also indicated that the applicant had refused to go to the shower rooms, whereas, according to the applicant, the remand prison did not have a bath-house for inmates. According to the applicant, the cell was very small and had no natural light or ventilation. He did not receive hot meals. It was prohibited to lie or even sit on the bed between 6 a.m. and 10 p.m. The bed was very close to the toilet pan. The water for flushing, drinking and washing was available from the water-tap above the toilet pan. The second applicant spent seven days in that cell.
58.  The Government described the conditions in the isolation cell as follows. The cell in which the second applicant was placed measured 5.52 square metres, which was more than the minimal surface area established by law. The second applicant was detained in the cell alone. The cell had a folding bed, a washbasin with cold water, a toilet, a shelf for toiletries, a chair and a table. The cell was ventilated naturally, and was lit by a day-time lamp and a night-time lamp (dezhurnoye osvescheniye). In addition, the cell had a window measuring 60 x 90 cm. The cell was equipped with a cistern for boiled water which was supplied by the warders when necessary. Referring to the certificates issued by the head of the remand prison, Mr Tagiyev, dated 7 August 2008, the Government alleged that illumination, temperature and humidity in the isolation cell had corresponded to the sanitary standards. The distance between the toilet and the bed was one metre, which was explained by the small dimensions of the cell; such a distance, however, respected basic requirements of hygiene. The bed was unfolded during the night, namely between 11 p.m. and 6 a.m. During the daytime the second applicant could sit on the chair. The Government also attached a report of inspection of sanitary conditions of certain other premises of the remand prison (not apparently related to the cells where the second applicant was detained), dated January 2006, as well as two reports of the inspection of the ordinary cells where the second applicant was detained dated February 2004 and January 2005, which concluded that sanitary condition of the cells was satisfactory. The Government also produced a contract with a firm in charge of disinfestation of the remand prison, dated 15 August 2005, and several “certificates of completed work”, dated 2006 and later.
59.  Further, in the Government’s words, while in detention in the isolation cell the second applicant was provided with hot meals three times a day in accordance with the established standards. The Government produced extracts from prison’s kitchen record, describing composition of the meals served to the prisoners. The second applicant had a right to a one-hour daily walk during the daylight hours.
60.  On the hearing days the detainees were provided with dry meals; in the court building they were given hot water to prepare tea, coffee, or instant food. As follows from the documents submitted by the Government, in 2004-2005 the second applicant took part in over 160 days of hearings. However, he always refused to take the dry meal; he preferred the food he received from his relatives. The Government produced a handwritten waiver by the second applicant whereby he refused to receive dry meals. The doctors did not recommend him any special diet, so he could have eaten the same food as other prisoners.
61.  On 4 July 2003, soon after the arrest of the second applicant, the first applicant was summoned to the GPO and interviewed as a witness in the criminal case concerning Apatit. He appeared before the investigator and gave testimony. During the interview he was assisted by Mr Drel, one of his and the second applicant’s lawyers.
62.  On an unspecified date in July 2003, the First Deputy General Prosecutor, Mr Biryukov, ordered that the case concerning tax payments of the trading companies registered in the Lesnoy town, which had been closed on 29 August 2002 (see paragraph 31 above), be re-opened and transferred to the GPO.
63.  On 8 July 2003 the prosecution searched the premises of the regional office of the State Property Fund, situated in Murmansk, which could have held information on the privatisation of Apatit.
64.  On 9 July 2003 the investigators searched the premises of Apatit.
65.  On 10 July 2003 the prosecution searched the premises of the bank Menatep Sankt-Petersburg, which was affiliated with Yukos. The search was authorised by the Deputy General Prosecutor, Mr Biryukov, in a decision of 8 July 2003.
66.  On 29 July 2003 the GPO searched the premises of Russkiye Investory Plc.
67.  On 7, 8 and 14 August 2003 new searches were carried out in the premises of Menatep Sankt-Petersburg.
68.  On 16 August 2003 the GPO obtained a report by two experts, Mr Yeloyan and Mr Kupriyanov. That report calculated damages allegedly suffered by Apatit as a result of the manipulation with the trading prices of apatite concentrate. It compared the net profit of Apatit during the periods when apatite concentrate was sold independently and when it was sold through intermediaries proposed by the Yukos management.
69.  On 3 October 2003, based on the warrant issued by the Deputy Prosecutor General on the same day, the investigative team, headed by investigators Mr Pletnev and Mr Uvarov, carried out the first search in Yukos’s premises and in the homes of its senior managers located in the village of Zhukovka, Moscow Region, building no. 88. In particular, the investigators searched the homes of the second applicant, the homes of Yukos vice‑president Mr Brudno, and the home of the applicant’s friend, Mr Moiseyev. The investigators also searched the office of Mr Dubov, a Duma Deputy. According to the applicants, the investigators entered the building and started the searches without having produced a search warrant. The searches were attended by several attesting witnesses, in particular Ms Ardatova and Ms Morozova, cleaning ladies.
70.  The applicant indicated that the search had been carried out simultaneously on several floors of the building, so the attesting witnesses had been physically unable to see what materials had been seized. Furthermore, the documents found during the search were seized and packed in bulk, without detailed lists enumerating particulars of those documents. The documents seized during the search were later added to the materials of the case-file. Some of the documents and objects seized during that search were added to the case file by an order of 11 February 2004.
71.  On 9 October 2003 the investigators, based on a search warrant issued on the previous day by the Deputy Prosecutor General, searched the offices of ALM Feldmans, a law firm providing legal services to Yukos, and the offices of the applicants’ lawyer, Mr Drel, all located in the Zhukovka village. According to Mr Rakhmankulov, who testified about the circumstances of the searches later at the trial, he had asked investigator Mr Karimov whether the latter had been aware that the rooms in question had been rented by the law office of Mr Drel. Mr Karimov had replied in the affirmative. Mr Moiseyev testified that he had informed the investigators that the offices they had been searching belonged to a lawyer. At the entrance to the floor of the building there had been a sign identifying Mr Drel as a lawyer. The files seized during the search were labelled as containing lawyers’ notes related to the defence of the applicants. The search report mentioned that the seizure had been carried out “in the Moscow Region, village of Zhukovka 88a, 4th floor, rented by ALM Law Bureau ...”, and that one of the offices had a tag indicating “work papers of lawyer Mr Drel”. Some time after the start of the search Mr Drel arrived in Zhukovka. He informed the investigators that he was a lawyer with the Moscow Bar and protested against the breaking into his office. However, the investigators did not let him enter the building. At the end of the search he was allowed to make his comments on the search record. A separate sheet with comments on the procedure in which the search was carried out stated: “Lawyer Drel, who appeared at the premises around 7 p.m., despite his protests, was taken by police officers [out] of the territory on which building No. 88a was located” and notes “breaking and entering into Moscow City Bar Association lawyer Drel’s [office]”.
72.  As a result of those two searches, a large number of documents were seized, as well as hard drives of several computers. The hard drives were examined by the investigators at the GPO premises in the presence of attesting witnesses and then transmitted to experts for the extraction of information contained therein. The experts drew up a list of files that had been found on the drives, but neither the drives themselves nor the list of files were attached by the GPO to the applicants’ criminal case materials. Electronic documents from those drives were presented to the trial court in the form of print-outs. The applicants claimed that there had been a discrepancy between the amount of information on hard drives of the computers seized during the search and the amount of information produced to the court. Furthermore, the applicants claimed that the hard drives seized had not been properly packed and sealed, so it was possible to add information to them while the drives were in the possession of the GPO.
73.  Over the following days the GPO also searched the headquarters of the political party Yabloko and an orphanage which was under the patronage of the first applicant; they removed from the latter premises a computer server, said by the authorities to hold Yukos financial data.
74.  On 10 October 2003 a GPO investigator, Mr Karimov, refused to grant the petition of the second applicant to attach official correspondence related to the inquiry conducted following Presidential Directive No. Pr‑2178 (see paragraph 32 above) to the case materials.
75.  On 17 October 2003 Mr Drel was summoned to the GPO for questioning in relation to the criminal cases against the second applicant. Mr Drel refused, referring to his status as advocate and his position as the second applicants’ representative in the criminal proceedings at issue. Later the Moscow City Chamber of Lawyers ruled that to answer questions in the circumstances would be a violation of the law “On the Advocacy and the Bar in the Russian Federation”.
76.  On the same day the prosecution brought charges of personal tax evasion against Mr Shakhnovskiy, a close friend and business partner of the first applicant. According to the prosecution, he fraudulently reduced the amount of personal income tax due by using the “individual entrepreneur” scheme (see paragraph 15 above).
77.  On 20 October 2003 the investigator ordered a seizure from Trust Investment Bank and received the sanction of First Deputy Prosecutor General, Mr Biryukov, for that measure.
78.  On 21 October 2003 the Deputy General Prosecutor, Mr Kolesnikov, said in a press conference that charges might be brought against other senior managers of Yukos. On the same day the investigator again searched the premises of the Menatep Sankt-Petersburg bank.
79.  On 22 October 2003 the investigator searched the premises of the Trust Investment Bank.
80.  On 25 October 2003 the first applicant was arrested in Novosibirsk and transported to Moscow where GPO charged him with business fraud and tax evasion. Further, at the request of the GPO, the Basmanniy District Court of Moscow decided to detain the applicant pending the investigation. During the following months his detention was extended several times.
81.  On the same day Mr Drel was summoned to the GPO to testify as a witness. He refused to testify, referring to his professional status and his position in the case of the first and second applicants.
82.  On 27 October 2003 the GPO attempted to interrogate Mr Drel as a witness. He refused to testify.
83.  On the same day Mr Shakhnovskiy was elected to serve as a Senator, i.e. member of the upper chamber of the Russian Parliament. Later he resigned following a request by the Prosecutor General in which the latter claimed that Mr Shakhnovskiy’s election had been irregular and thus null.
84.  On 3 November 2003, as a consequence of his arrest, the first applicant resigned as chief executive of Yukos.
85.  On 10 November 2003 the first applicant was formally charged by the GPO.
86.  On 11 November 2003, an investigator of the GPO investigative team arrived at the Trust Investment Bank for the second time and carried out another seizure with reference to the search warrant of 20 October 2003.
87.  On an unspecified date in November 2003 the Tax Service lodged, within criminal proceedings against the applicants, a civil claim against them on behalf of the State. The Tax Service claimed that the applicants, in their capacity as Yukos senior managers, caused the State damages in the amount of 17,395,449,282 Russian roubles (RUB) (taxes not paid by the trading companies) plus RUB 407,120,540 (taxes unlawfully reimbursed from the State budget). The overall amount of the civil claim was RUB 17,802,569,822 (over 510 billion euros (EUR)); these amounts corresponded to the amounts mentioned in the bill of indictment on company tax-evasion charges brought against the applicants. The statement of claim was lodged by one of the Deputy Ministers, Mr Shulgin. The text of the statement by Mr Shulgin did not contain any calculation of the amounts due by the applicants.
88.  On 5 and 16 December 2003 a GPO investigator conducted a search in Tax Inspectorate no. 5 for the Central District of the City of Moscow and seized some documents. According to the applicants, no prior approval had been obtained from the General Prosecutor for that search.
89.  Later in 2003 the Moscow City Tax Inspectorate No. 5 lodged additional civil claims against the applicants claiming tax arrears and penalties related to the personal tax evasion charges.
90.  The charges against the applicants formulated by the GPO may be summarised as follows:
(a)  Misappropriation of Apatit shares
91.  In 1994 the State privatisation authority decided to sell 20 per cent of the stock of Apatit Plc, a large mining company producing apatite concentrate. Under the conditions of the privatisation tender the buyer would be under an obligation to invest money in Apatit’s business activities.
92.  In order to participate in the privatisation tender, the applicants, together with their subordinates and friends, created several sham companies: Volna, Malakhit, Flora, and Intermedinvest. The director of Volna was Mr Kraynov. Further, the second applicant, as head of the Menatep bank, issued indemnity bonds on behalf of Menatep, guaranteeing the capacity of the first three companies to pay. The fourth company produced a fake indemnity bond from the European Union Bank. As a result, the four companies were admitted by the State privatisation authority for participation in the tender. The applicants delegated several people working in the Menatep bank and affiliated companies to participate in the privatisation tender on behalf of the sham companies.
93.  At the tender on 30 June ‑ 1 July 1994 Intermedinvest offered the best conditions (RUB 19,900,000 in the form of investment obligations), but then revoked its bid. Other companies participating in the tender did the same. As a result, Volna, which had submitted the lowest bid, obtained the privatisation contract.
94.  Under that contract Volna acquired 415,803 shares in Apatit (or 20 per cent of its capital) from the State for a nominal price of RUB 415,803,000 (pre-1998 devaluation). According to the prosecution, the real price of the shares at the time was RUB 563,170,000,000 or USD 283,142,283. In addition, Volna accepted an obligation to invest RUB 79,600,000 in Apatit within one month, and RUB 394,219,000 by 1 July 1995. However, that condition was not met within the time-limits specified in the privatisation contract.
95.  On 29 November 1994 the prosecutor, acting on behalf of the State privatisation authority, brought proceedings against Volna before the Commercial Court of Moscow seeking nullification of the privatisation contract and the return of the Apatit shares. The prosecutor indicated that Volna had failed to fulfil its investment obligations under the privatisation contract.
96.  In 1995 Volna transferred the amount stipulated in the privatisation contract to Apatit’s bank account and submitted a bank transfer order confirming this to the Commercial Court. Consequently, on 16 August 1995 the Commercial Court adopted a judgment rejecting the claims against Volna on the ground that the money stipulated in the privatisation contract had been duly paid. However, on the same day the amount received by Apatit was transferred back to Volna’s bank accounts by the director of Apatit. Therefore, de facto the money due under the privatisation contract was not paid. The prosecution qualified this episode as business fraud.
(b)  Failure to comply with the court decision concerning Apatit
97.  On 12 February 1998 the judgment of 16 August 1995 was quashed. The Commercial Court of Moscow, sitting as a court of appeal, declared the privatisation contract null and void and ordered that the Apatit shares be returned to the State. However, by that time Volna had already sold the Apatit shares to a number of other legal entities created and controlled by the applicants. As a result, the decision of the Commercial Court of Moscow of 1998 remained unenforced and the enforcement proceedings were discontinued.
98.  In March 2002 the second applicant proposed a friendly settlement of the dispute and the State Property Fund (the body in charge of the privatisation deal) accepted his offer. On 19 November 2002 the friendly settlement was concluded. Under that settlement Volna paid the State USD 15,130,000 and the State withdrew its claim to the Apatit shares. The above amount was calculated by the audit firm BC-Otsenka, and was accepted by the Commercial Court of Moscow as the market price for the shares. On 22 November 2002 the Commercial Court of Moscow endorsed the friendly settlement agreement and closed the case. However, according to the prosecution, the real market price of the shares at the relevant time was USD 62,000,000. It referred to the audit report of 19 August 2003, commissioned by the investigator (the report by Mr Yeloyan and Mr Kuprianov), and a report by the consulting firm Rusaudit, Dorhoff, Yevseyev and Partners, dated December 2002, commissioned by the Government of the Russian Federation. Thus, the decision of the Commercial Court had been based on false evidence. As a result, the decision of 12 February 1998 remained non-enforced through the applicants’ fault. The prosecution qualified this episode as intentional avoidance of execution of a court judgment.
(c)  Embezzlement of Apatit’s profits and assets in 1997 – 2002
99.  By 1995 the applicants owned, through affiliated companies, a controlling stake of Apatit’s shares (including the 20 per cent acquired through the privatisation tender). On 1 December 1995 the applicants, as major shareholders, appointed a group of managers and assigned to them all of Apatit’s sales operations. As a result, all sales went through a number of sham companies controlled by the applicants and located in low-tax zones. The apatite concentrate was bought by those companies at a lower price and then re-sold at the market price. The companies controlled by the applicants thus accumulated Apatit’s profits; the difference between the “internal” and “external” prices was accumulated in foreign bank accounts controlled by the applicants. As a result, the minority shareholders of Apatit (including the State, which retained a block of shares in that company) suffered pecuniary losses. The prosecution qualified this episode as embezzlement.
(d)  Misappropriation of NIUIF shares
100.  In 1995 the State privatisation authority decided to sell at tender 44 per cent of the shares in NIUIF Plc, a Moscow-based research institute. To that end the authority issued an invitation to tender. One of the conditions of the privatisation tender was that the winner would have to invest a certain amount of money to support NIUIF’s on-going activities.
101.  According to the prosecution, the applicants were interested in obtaining the rights to one of the main assets of NIUIF – an office building in Moscow. In order to take part in the privatisation tender the applicants, acting through their subordinates, in the Menatep bank, created two sham companies: Polinep and Walton. Further, the second applicant issued two indemnity bonds on behalf of Menatep in the amount of USD 25,000,000, guaranteeing those companies’ capacity to pay. As a result, they were authorised by the State privatisation authority to participate in the tender.
102.  At the privatisation auction Polinep proposed that it would invest USD 50,000,000 in NIUIF; this was the highest bid, so Polinep was declared to have won. However, Polinep immediately withdrew its bid. Walton made a bid of USD 25,000,000; this was the highest investment bid, so on 12 September 1995 Walton obtained the privatisation contract. On 21 September 1995 the State sold 44 per cent of the shares in NIUIF to Walton at the nominal price of RUB 130,900,000. According to the prosecution, the market price of the shares acquired by Walton was RUB 5,236,000,000.
103.  On 28 December 1995 Walton transferred the investment money to NIUIF’s account in the Menatep bank. Mr Klassen, the then director of NIUIF, reported to the State privatisation authority that Walton had fulfilled its obligations under the privatisation contract. On the following day he transferred the money back to Walton’s account in Menatep. As a result the conditions of the privatisation contract were not met de facto. The prosecution qualified this episode as fraud.
(e)  Failure to comply with the court decision concerning NIUIF
104.  In February 1996 Walton sold the NIUIF shares to another three sham companies created by the applicants: Khiminvest, Metaksa, and Alton. Under the sale contract those companies received the shares but were free from any investment obligations vis-à-vis NIUIF. Mr Klassen confirmed to those companies in writing that NIUIF would not have any pecuniary claims against the buyers of the shares. Mr Klassen also reported to the State privatisation authority that Walton had fulfilled its investment obligations under the privatisation contract.
105.  Further, in order to control the activities of NIUIF, the applicants delegated several employees from the Menatep bank to the NIUIF board of directors. As a result, the board of directors approved the sale of NIUIF’s main asset – its office buildings in Moscow – to Pender Limited, an offshore company controlled by the applicants and registered in the Isle of Man. That company acted through persons who worked in the Menatep bank or the Rosprom holding and were thus affiliated with the applicants. The applicants also delegated their staff to the NIUIF management in order to oversee that company’s day-to-day activities.
106.  In 1997 the State Property Fund (the privatisation authority) learned that Walton had failed to discharge its main obligation under the privatisation contract, namely to invest in NIUIF. The State Property Fund brought proceedings against Walton, seeking the return of the shares. As a result, on 24 November 1997 the Commercial Court of Moscow quashed the privatisation contract of 1995 and ordered the seizure of the shares from Walton.
107.  However, by this time the NIUIF shares had already been sold by Walton, so that decision could not be executed. In January 1998 the shares were re-sold to several other sham companies, which had also been created by and were controlled by the applicants (Danaya, Galmet, Fermet, Status, Elbrus, Triumph, Leasing, Renons, Izumrud, Topaz). As a result, the decision of the Commercial Court of Moscow could not be enforced because of the applicants’ manipulations with the NIUIF shares. The prosecution qualified this episode as intentional avoidance of execution of a court judgment.
(f)  Company tax evasion: unlawful tax cuts
108.  Under Article 199 of the Criminal Code (“Evading Payment of Taxes ... Collectible from Organisations”) the GPO forwarded two distinct charges against the applicants: one related to unlawful tax cuts and another related to payment of taxes with promissory notes. According to the prosecution, the overall amount of unpaid taxes under these two heads in 1999-2000 amounted to (post 1998 devaluation) RUB 17,395,449,282.
109.  As to the first episode, according to the prosecution, the applicants through their subordinates registered a number of sham companies in the Lesnoy town, namely Business Oil, Forest Oil, Vald Oil and Mitra. Those companies were not formally affiliated with the applicants or Yukos, but were controlled by them de facto. Those companies claimed to operate in Lesnoy, and, on that ground, they qualified for tax cuts. However, those companies did not actually have any business activities in Lesnoy but were controlled and administered from Moscow. As a result, the profits from the oil trade were concentrated in those companies. Some of the profits of the sham companies were later returned to Yukos bank accounts by means of a series of complex financial transactions involving the exchange of promissory notes. The industrial group’s overall fiscal burden was thus significantly lightened.
110.  According to the bill of indictment, Business Oil avoided payment to the Lesnoy town budget of RUB 1,217,622,799 in 1999 on account of unlawfully obtained tax cuts, and RUB 1,566,046,683 in 2000 (or RUB 2,783,669,482 in aggregate). The prosecution qualified this scheme as tax evasion.
(g)  Company tax evasion: payment of taxes with promissory notes
111.  The second charge concerned the method of payment of the remaining taxes (after the tax cuts) by the sham companies. In addition to obtaining tax cuts, the sham companies registered in Lesnoy did not pay taxes in monetary form. Instead, they obtained promissory notes from Yukos and then transferred them to the Lesnoy town Tax Inspectorate. The value of the promissory notes was later offset from the tax debt of the sham companies. Thus, in 1999 the four sham companies (Business Oil, Forest Oil, Vald Oil and Mitra) transferred to the Lesnoy town budget promissory notes in the amount of RUB 5,315,535,283; in 2000 the sham companies transferred promissory noted worth of RUB 10,381,901,191.
112.  Over the following years the promissory notes were paid off, but only in part: in 2000 promissory notes amounting to RUB 1,048,391,487 had not yet been honoured. The prosecution qualified payment of taxes by promissory notes by the sham companies as another count of tax evasion.
(h)  Unlawful tax refund
113.  Since the value of some promissory notes was higher than the tax debt, the sham companies obtained a tax refund from the State in monetary form. Thus, in 2000-2001 the Federal Treasury paid the sham companies the difference between the tax debt and the value of the promissory notes, or deducted that difference from the amounts of taxes to be paid by those companies.
114.  In 2001, when the regional tax authority started a tax audit of the sham companies registered in Lesnoy, those companies formally discontinued their activities in Lesnoy and merged with another sham company registered in the town of Aginskiy, another low-tax zone. Later those companies were again re-registered in the Chita Region. Each new company received a part of the claims which the liquidated companies had had against the State budget on account of the hypothetical overpayment of taxes. According to the prosecution, in 1999-2001 the applicants, through the sham companies, received RUB 407,120,540 from the budget on account of “tax overpayments”. The prosecution qualified that situation as embezzlement of the budget funds and qualified it under Article 159 of Criminal Code (“Fraud”).
(i)  Money transfers to Mr Gusinskiy’s companies
115.  In 1999 and 2000 the first applicant allegedly misappropriated assets belonging to the Yukos group. Thus, important sums of money were transferred from the accounts of Yukos and two other companies affiliated with Yukos (Mitra Limited and Greis Limited) to the bank accounts of companies belonging to Mr Gusinskiy, a mass-media tycoon, namely Media-Most, Delf, Byron, Sard, Osmet, GM-2, NTV-Mir Kino, and Most Bank. Those transfers had no business purpose and thus caused damage to Yukos shareholders. According to the prosecution, Mr Gusinskiy received RUB 2,649,906,620 from the applicant. The prosecution qualified those transfers as fraud.
(j)  Personal income tax evasion
116.  Over the period 1998-2000 the applicants registered themselves as self-employed entrepreneurs. In the registration form they indicated that they were private consultants for several foreign firms, and that their income consisted of fees for consulting services. This status permitted the applicants to pay a fixed amount of imputed income tax (or the cost of a “patent” – a licence obtained for the consulting services), defined by the Small Business Act, instead of paying personal income tax and making social-security contributions (as they would do if they declared their benefits as their “salary”).
117.  In order to prove their eligibility for the status of “self-employed entrepreneur”, the applicants concluded and produced fake agreements on consulting services (“consultancy agreements”) for foreign companies, namely Status Services Limited and Hinchley Limited, situated in the Isle of Man. The consultancy agreements of the first applicant with Status Services were agreements of 2 March 1998, 5 October 1998, 30 November 1998, and 20 April 1999.
118.  The second applicant was the chief executive of Status Services. On that particular point the bill of indictment (p. 532) stated that “according to American Express corporate cards, which were seized during a search at [the second applicant’s house and added to the case file], on 6 June 2000 the said cards were sent to him as the head of Status Services Limited”. The second company was controlled by Mr Moiseyev, a close friend of both applicants. Under that agreement the applicants received money in the guise of payment for consulting services; however, in reality the money was a wage for their work in Yukos and affiliated firms. As a result, they paid much lower taxes than if they had received the same sum as their salaries. According to the prosecution, the unpaid personal income tax (together with social security contributions) amounted in 1998-1999 to RUB 54,532,186 for the first applicant and in 1998-2000 to RUB 7,269,276 for the second applicant. The prosecution qualified that scheme as personal tax evasion.
119.  At the pre-trial stage the criminal cases of the two applicants were investigated separately. On 22 August 2003, the pre-trial investigation in the second applicant’s case was over and materials of his criminal case were presented to him and to his lawyers for familiarisation (the “period of trial preparation”). On 25 August 2003 the second applicant’s lawyers, Mr Baru and Mr Drel, signed a form attesting that they had received 146 volumes of the criminal case and thirteen audiotapes with questionings. Later the prosecution supplemented the materials of the case with additional volumes (see paragraph 126 and 127 below).
120.  On 25 November 2003 the pre-trial investigation in the first applicant’s case was over. The first applicant and his lawyers were given access to 227 volumes of the criminal case file, containing approximately 55,000 pages.
121.  The applicants studied the materials of their respective case files in the remand prison, with or without their lawyers. As follows from the forms produced by the Government, the applicants’ lawyers and the applicants studied the materials on an almost daily basis. Each defence team was given access to one copy of their respective case files. The applicants were entitled to read their respective case files in the remand prison in the presence of the investigator. The applicants were not permitted to make photocopies of the documents, but they could take handwritten notes. When the applicants wished to discuss the documents in private with their lawyers the investigator removed the documents. On 17 October 2003 the second applicant asked the investigator to allow him photocopying in the remand prison, but this was refused. The second applicant also complained that the schedule for studying the materials of the case was not respected, and that he had been given only about three hours per day to study the case.
122.  In the course of 2003, as from August and November, respectively, the defence lawyers were able to study the materials of the case files separately from their clients in the premises of the GPO, and to make photocopies of documents from those case files that they had pre‑selected. However, there was only one official copy of the materials of the case, so if a particular volume of the case file was in the premises of the GPO, it was not available for examination at the remand prison. The defence lawyers could pass photocopies to the applicants, but after the perusal by the administration of the remand prison. According to the applicants, they were unable to keep any significant amount of documents in their cells, since the cells had not been designed for that purpose.
123.  At some point in January 2004 both case files were transported to the remand prison and remained there. On 27 January 2004 Mr Krasnov, one of the lawyers for the second applicant, complained to the investigator that although the defence lawyers wanted to study the materials in the GPO premises, this had become impossible since the whole file remained in the remand prison. On 2 February 2004 Mr Krasnov repeated that complaint. On 3 February 2004 the lawyer Mr Gridnev wrote a complaint in similar terms, but the case file remained in the remand prison.
124.  On 15 January 2004 the second applicant wrote a complaint about the refusal of the investigator to allow him to make a copy of the materials of the case file for his own use.
125.  On 6 February 2004 the second applicant asked the investigator to allow him use of a magnifying glass and a calculator. However, this was refused. In the following months the second applicant repeatedly refused to study the case file without those objects.
126.  On 16 February 2004 new charges were brought against the second applicant, and 16 further volumes of the case file were presented to him and his defence for familiarisation. The total number of volumes in the second applicant’s case file thus grew to 162. The defence asked to be given a possibility to study those materials in the premises of the GPO, since it was impossible to make photocopies or use cameras in the remand prison. On 25 February 2004 one of the investigators replied to the second applicant’s lawyer, Mr Baru, that it was impossible to examine the materials of the case file in the GPO premises.
127.  Before the criminal case was referred to the trial court, two volumes of the bill of indictment setting out the prosecution’s version of events, with references to the case file, were served on the second applicant. Each volume contained 250 pages on average, i.e. the overall amount of materials in the second applicant’s case grew to 41,000 pages in total.
128.  On 24 March 2004 the newspaper Komsomolskaya Pravda published an interview with Mr Biryukov, the First Deputy Prosecutor General. In that interview he stated as follows:
“The defendants [Mr Khodorkovskiy and Mr Lebedev] are taking their time before the trial; they know that after [their] conviction they will not have an opportunity to appeal to the public and complain about injustice, but will have to endure a well‑deserved punishment. ... They knew it long before we charged them. They knew it when they were committing those crimes! Yukos is like a viral infection, quickly spreading across the country and covering it with pockets of contamination. Here is the map of the epidemic: Samara, Volgograd, Mordoviya. ... They left dirty marks everywhere in the country.”
129.  On 25 March 2004 the lead investigator decided to withdraw the case files from the applicants and submit it to the court. It appears, however, that the case files were not withdrawn on that date.
130.  On 20 April 2004 the prosecution filed a petition with the court, seeking to limit the period for trial preparation with the case materials granted to the applicants. On 23 April 2004 the Basmanniy District Court of Moscow gave the defence teams until 15 May 2004 to finalise preparations for the trial. The defence challenged that decision, claiming that the applicants needed more time. The first applicant indicated that he had been studying the case-file according to the established schedule, without lunch breaks, and was prepared to study it on Saturdays, so that it was not his fault that the preparation for the trial was taking so long. However, on 25 May 2004 the Moscow City Court upheld the lower court’s ruling.
131.  According to the Government, on 7 May 2004 the second applicant obtained access to the records of the court hearings of 15, 16 and 20 April 2004. On 12 May 2004 he was given access to the record of the court hearing and volumes 157 and 158 of his case file.
132.  On 13 May 2004 the GPO withdrew the case file from the defence. On the same day the second applicant signed a statement in which he confirmed that he had read all the materials in the case file. However, on 17 May 2004 he withdrew that statement.
133.  On 14 May 2004 the prosecution submitted the applicants’ cases to the Meshchanskiy District Court of Moscow for trial.
(b)  Communication of the applicants with their lawyers before the trial
134.  At the pre-trial stage each applicant was defended by his own defence team, each comprised of several lawyers. Although formally there was no cooperation between the two defence teams, it appears that they pursued the same strategy, enjoyed the same procedural rights and were subjected to the same limitations during the investigation proceedings.
135.  According to the applicants, the lawyers’ documents were routinely examined by the prison staff both before entry to the meeting rooms and on exit from it. As attested by one of the lawyers on behalf of the second applicant, Mr Mkrtychev, the prison administration insisted on inspecting all written correspondence between the applicants and their lawyers. Furthermore, the applicants’ own paper notebooks were inspected before and after the meetings with the lawyers. The applicants also indicated that all meetings could only take place in specific consultation rooms (even if that meant that the defence team had to wait for one of them to become free whilst other rooms were available). The applicants inferred that those meeting rooms had been equipped with secret listening devices.
136.  On 11 November 2003 a lawyer for the first applicant, Ms Artyukhova, was searched as she was leaving the applicant’s remand prison. A report dated 11 November 2003 by a prison officer who had participated in the search indicated that the search had been ordered by inspector Mr B., who had ordered the search because he had had sufficient grounds to believe that Ms Artyukhova was carrying prohibited objects. A report by another prison officer, inspector Mr F., to his superiors stated that he had seen that the first applicant and Ms Artyukhova “exchanged a notebook with some notes, and also made notes in it” during their meeting. The documents which she was carrying were seized and a piece of paper allegedly written by the applicant was removed and sent to the prosecution. All of the seized documents were added to the case materials and later used by the prosecution before the Basmanniy District Court of Moscow in support of its requests for extensions of the applicant’s detention, as proof that he was planning to intimidate prosecution witnesses. The applicant claimed that the note was in Ms Artyukhova’s own handwriting and that it had been compiled before her visit to prison and not during it. That note read as follows:
“- Kodirov [the applicant’s cellmate]: expects a second visit by the lawyer Solovyev;
- to work on the question of sanctions concerning violation of rules on keeping in custody SIZO (active <-> passive forms of behaviour (ex. hunger strike);
- to work on the question of receiving money for consultancy fees on the purchase of shares by various companies involved in investment activities;
- expert analysis of signatures, to work on this question because the documents submitted are not the originals but photocopies (expert analysis of photocopies of signatures of M.B.);
- to work through questions with witnesses Dondonov, Vostrukhov, Shaposhnikov (questioning on 06.11.03 - according to circumstances);
- concerning participation in RTT Lebedev must give negative (indecisive) answer;
- prerogatives of executives of Rosprom and Menatep - to show the scope of their prerogatives, how promotions are made;
- check witnesses of the defence (former managers and administration of Rosprom, Menatep position about 100, the essence of testimonies
1) absence of intention;
2) absence of instructions, advise on methods of investment and tax activity;
It is necessary to work on testimonies of witnesses Fedorov, Shaposhnikov, Michael Submer, tax people;
Other - to conduct, by Western audit and law firms, audit of personal fortune, in the following context ‘I have right to receive income in accordance with decision of meeting of shareholders ‘ counsel. ... in the case ...”
137.  On 4 December 2003 the second applicant met with one of his lawyers, Mr Baru. According to the Government, a prison officer who supervised the meeting noted that the second applicant gave Mr Baru a handwritten note which was not a part of any “procedural document”. Mr Baru tore the note to pieces and hid the shreds in the pocket of his trousers. At the end of the meeting the prison officer informed Mr Baru that all written complaints and requests addressed to the lawyer must first be inspected by the administration of the remand prison and then forwarded to the lawyer within three days. Mr Baru was invited to hand over the “prohibited object” but he refused. Prison officers then searched Mr Baru’s clothes and discovered the shreds of the note. Those shreds were seized.
138.  According to the handwritten explanations by Mr Baru made on the same day he had indeed had in his pocket shreds of the notes he had made during the meeting with his client. Those shreds were seized by a prison officer with reference to section 34 of the Detention on Remand Act. On 5 December 2003 the shreds of the note were sent by the remand prison administration to the investigator. It contained handwritten sketchy notes which mentioned the names of General Prosecutor Mr Ustinov and his deputy Mr Biryukov, press campaign in the mass media, names of the lawyers, reference to the European Court, some allusions to the current political situation, etc.
139.  On 11 March 2004 documents were seized from the first applicant’s lawyer Mr Shmidt as he left the detention facility after a consultation with the first applicant. The inspector at the first control post demanded that Mr Shmidt should hand over to her for inspection a transparent plastic paper-case that he had with him. Mr Shmidt refused, explaining that it was his lawyer’s file. In response, the inspector forcibly seized the papers from him. According to the first applicant, the seized document itself comprised two sheets. The first sheet was written by Mr Simonov, the head of the Glasnost Defence Foundation. It was in Mr Simonov’s own handwriting and was a rough draft of a proposed letter in support of the applicant - that letter was published some time later. The second sheet was in Mr Shmidt’s own handwriting. Both notes were written quite some time before the 11 March visit to the applicant. On 13 March 2004 Mr Karimov, the lead investigator, wrote to Mr Denisov at the Ministry of Justice stating that the note seized “contained an instruction on counteraction to the investigation by way of influencing the investigation through mass media”. Mr Denisov then wrote on 26 March 2004 to the head of the Main Directorate of the Ministry of Justice requesting measures to be taken against Mr Shmidt. On 7 May 2004 the Ministry of Justice Main Directorate wrote to the St Petersburg Bar Association requesting that disciplinary proceedings be started against Mr Shmidt for breach of professional ethics. Mr Shmidt was subsequently exonerated at the disciplinary proceedings, where it was determined that Mr Shmidt had been entitled to take the document into and out of the remand prison and that it was legally privileged.
140.  The Government produced a report by Mr Ms., a remand prison officer, dated 15 July 2010. In his handwritten deposition he testified that there had been no seizures of computers or documents from the lawyers of the second applicant. A similar written declaration was made by Mr Sl., and Mr Zkh., remand prison officers.
141.  On 5 February 2004 Mr Shakhnovskiy was convicted by the Meshchanskiy District Court, presided by Judge Kolesnikova, for personal income-tax evasion. In those proceedings Mr Shakhnovskiy did not plead guilty; however, he had reimbursed to the State the amounts of outstanding taxes and penalties as calculated by the Tax Service. Execution of the sentence was conditionally suspended by the Judge.
142.  Judge Kolesnikova found that Mr Shakhnovskiy had deliberately included false information into his personal tax declarations by stating that he had received payments from Status Services for some “consulting services”, although he had been aware that de facto he had received the aforesaid amounts for his work in Yukos (pages 22-23 of the judgment). In support of those findings Judge Kolesnikova referred, inter alia, to an internal memo addressed to the first applicant and written by Ms Kantovich, one of the employees of Yukos-Moskva, on behalf of Mr Aleksanyan, the then head of the legal department of Yukos. That memo analysed various methods of tax minimisation, in particular the “individual entrepreneur” scheme. The Judge also referred to identical contracts concluded between Status Services and other Yukos senior managers, including the second applicant, and to the corporate credit cards in the name of the second applicant sent to him as the head of Status Services and seized during the search in Zhukovka on 3 October 2003.
143.  On 8 June 2004 Judge Kolesnikova ruled that the case of the first applicant should be tried jointly with the cases of the second applicant and of Mr Kraynov (director of Volna, a firm which had participated on behalf of Menatep in the privatisation of Apatit). Upon the joinder of the cases the first applicant was given a copy of the second applicant’s case-file (165 volumes). The second applicant was given a copy of the first applicant’s case file (227 volumes). The case thus ran to 392 volumes in all at the start of the trial. Subsequently the applicant’s legal teams made copies of those case files for their use.
144.  The trial court in the joint case was composed of three judges: Ms Kolesnikova (president, a professional judge), Ms Klinkova and Ms Maksimova (lay assessors, non-professional judges). The court was assisted by seven secretaries who kept a summary record of the hearings. No verbatim record was made; however, the defence made an audio recording over the course of the trial. The prosecution was represented by Mr Shokhin and Mr Arkhipov. The united defence team was composed of Mr Aleksanyan, Mr Baru, Mr Drel, Mr Gridnev, Mr Krasnov, Ms Liptzer, Ms Lvova, Mr Mkrtychev, Ms Moskalenko, Mr Padva, Mr Rivkin, Mr Shmidt (who died in 2012), and several others.
145.  The hearings were public. They took place in a courtroom which held, according to the applicants, up to thirty people. The defence made an application for the case to be heard in a larger courtroom, but the court did not respond. Further requests were made by the defence for the trial to be televised or audio-recorded. However, no external media transmission of the hearings was allowed. A number of journalists were present in the courtroom.
146.  On 16 June 2004 the court held the first hearing, which was immediately adjourned due to the illness of one of the defence lawyers.
147.  On 23 June 2004, at the second hearing, the first applicant requested the court to grant him more time to study the materials in the second applicant’s case. That request was supported by the first applicant’s defence lawyers who stated they also needed more time. The defence claimed that they needed at least one more month to become conversant with the additional case materials. The court gave the defence time until 12 July 2004.
148.  On 12 July 2004, Ms Moskalenko (one of the defence lawyers for the first applicant) complained to the court about the insufficiency of the time granted. She indicated that in the time allocated by the court she had succeeded to familiarise herself with only 72 volumes of the second applicant’s criminal case. The Meshchanskiy District Court refused to give more time.
149.  Before the prosecution started presenting its case, the court discussed the arrangements for the future trial. The court indicated that the hearings would start at 11 a.m. and that it would not sit on Wednesdays, which would thereby assist the parties in the preparation for the trial. Those arrangements persisted during the first phase of the trial when the prosecution was presenting its case (July – November 2004).
150.  The two applicants were held in a barred dock resembling a metal cage, guarded by armed escorts. The third co-defendant, Mr Kraynov, who was not detained on remand, had a place in the courtroom outside the cage. The applicants were able to communicate with the defence lawyers through the bars. The conversations were always within the hearing of the escort officers and sometimes of the prosecutors, and the escort officers prevented the applicants and their lawyers from exchanging any documents.
151.  On 23 August 2004 the defence lawyers complained to the court that they were unable to show the defendants case materials in the courtroom and were unable to discuss the case confidentially with them. The escort officers required that the lawyers did not approach closer than 50 cm to the cage where the applicants were detained. Mr Padva, the lead lawyer for the first applicant, explained that he had to speak very loudly to his client to be heard at such a distance. The first applicant, in his turn, asked the court to be shown instructions or rules which fixed that distance and, more generally, defined the conditions of the communication between a defendant and his lawyer in the courtroom. The prosecutor replied that the defendants had to solve the matter not with the judge but with the administration of the remand prison or the escort service. Judge Kolesnikova then explained to the parties that she was not against them communicating during the breaks. However, in her words, the question of transmitting documents between the defence lawyers and the applicants did not belong to the competence of the court; the defendants were detained on remand and all questions related to the exchange of documents were within competence of the respective institution, in particular the escort service, and were regulated by the internal rules. If the exchange of the documents was compatible with those rules, the court would not be against it.
152.  At the hearing of 26 August 2004 Mr Padva again asked the court to allow him to show documents to his client. He agreed that he would submit to the judge all documents he would show to his client. According to him, the remand prison administration did not object to such a method of communication, provided that it satisfied the judge. The judge checked that information with the chief escort officer and then ruled that the court would review all the documents which the defence lawyers wanted to show to their clients. Mr Padva agreed that if those documents existed in a computer format, he would print them out and show them to the court in advance.
153.  On 27 August 2004 the defence lawyers once again complained that it was impossible to communicate effectively with the applicants during the questioning of witnesses, emphasising that if an adjournment was announced every time one or other question had to be discussed with the applicants in the court session, the trial would progress very slowly. The court responded by asserting that the discussion of any questions whatsoever with the applicants was possible only during the adjournments.
154.  On 31 August 2004 the first applicant personally complained to the court about the difficulties he was facing. He explained that his lawyers had initially been permitted to stand about 50 centimetres away from his cage but that that situation had changed and they were now required to stand about one metre away, while additional guards had recently been placed between the lawyers and the cage. The applicant explained that it was now impossible to have any confidential discussions at all with his lawyers whilst in the courtroom. In response, the head of the escort guards referred to a “security plan” which necessitated these arrangements.
155.  Over the following months the defence submitted several requests seeking to facilitate contact with the applicants in the courtroom, but the court refused to change the security arrangements. Thus, on three occasions (on 28 December 2004, 14 February 2005 and 15 February 2005) the first applicant prepared draft written testimony. On each occasion his lawyers were able to review the testimony only after the court had reviewed the drafts.
156.  On 28 September 2004 Ms Leutheusser-Schnarrenberger, the Special Rapporteur appointed by the Parliamentary Assembly of the Council of Europe, visited the Meshchanskiy District Court. She asked the court, through the first applicant’s lawyers, to allow her to speak to the first applicant. However, the court refused permission.
157.  In November 2004 the court moved on to the examination of the evidence submitted by the defence. On 11 November 2004 the court changed its working schedule and decided that it would start the hearings at 9.30 a.m. instead of 11 a.m. As a result, the duration of the time spent by the applicants in the court increased.
158.  At the end of 2004 the trial arrangements changed again. On 31 December 2004 the Meshchanskiy Court ruled that it would no longer observe Wednesdays as a non-court day. On 18 January 2005 the defence tried to obtain adjournments of the Wednesday hearings, but the request to that end was refused. The judge however explained to the parties that they could ask for an adjournment at any moment. The defence used that opportunity successfully at least twice: on 25 January and 22 February 2005.
159.  On 9 March 2005 the defence lodged an application for the judges to withdraw on the basis that their decisions to date had been in violation of Russian and international law. They referred to the one-sided treatment of evidence, serious limitations on contact between the applicants and their lawyers, the unfair denial of adequate time to prepare the case, etc. That application was dismissed.
160.  The applicants pleaded not guilty. The defence maintained, firstly, that the whole case had been politically driven and that the GPO was acting in bad faith. Further, they challenged the admissibility of evidence relied upon by the prosecution, in particular as regards those documents which had been seized during the searches in Zhukovka, in Mr Drel’s offices and at the second applicant’s home in 2003.
161.  As to the charges concerning company income tax evasion in connection with the Lesnoy trading companies, the applicants claimed that they had had no relation to those companies, that they had never heard of them, directed their operations or participated in their creation.
162.  Alternatively, the defence claimed that all tax cuts had been obtained by the trading companies in a lawful manner, that the law at the time allowed payment of taxes with promissory notes and that all the promissory notes had been eventually honoured, so the State budget had suffered no losses. Even if some of the financial operations described in the bill of indictment and impugned to the applicants had taken place, they did not amount to a criminal offence. The law, as applied at the relevant time, regarded those financial practices as perfectly legal or at least tolerated them. In support of those claims the defence sought to adduce a large number of documents, expert opinions and witness testimonies.
163.  As to the personal income tax evasion charge, the first applicant insisted that he had rendered services to Status Services and Hinchley; however, he refused to give more details on this point, referring to his right to remain silent provided by Article 51 of the Constitution. He was unable to give details concerning the conclusion of the service agreements with these two firms, and did not explain when and where exactly he had been providing services to them. The second applicant gave evidence in similar terms. In addition, he contested the allegation of the prosecution authorities that he had been a chief executive of Status Services. At the trial the first applicant testified that he decided to obtain a licence and become a self‑employed entrepreneur at the advice of his lawyers.
164.  The prosecution sought to rely on expert evidence dealing variously with an analysis of business transactions involving the applicants and the companies affiliated with them and tax payments and tax procedures at the relevant times. The experts for the prosecution were all appointed by the investigator at the preliminary stage of the investigation, and their written reports were submitted to the Meshchanskiy District Court together with the bill of indictment.
165.  Thus, Mr Yeloyan and Mr Kuprianov prepared three reports in all: a first report dealing with the evaluation of Apatit’s net profit for 2000-2002 and January-September 2002 from the sale of the apatite concentrate (see paragraph 68 above); a second concerning the personal income tax evasion charges against the first applicant, and a third concerning the personal income tax evasion charges against the second applicant.
166.  Mr Ivanov, Mr Kuvaldin, Mr Melnikov and Mr Shkolnikov prepared an expert report on the evaluation, as on 1 July 1994 and 1 October 2002, of the 20 per cent block of shares in Apatit.
167.  Mr Dumnov, Mr Krotov, Mr Khanzhyan and Mr Semago prepared an expert report on the material which was extracted from the computer server that had been seized in Zhukovka in October 2003.
168.  On 27 December 2004 the defence lodged a petition for a notarised and apostilled statement by Mr Prokofiev, who was absent on a business trip in the UK, to be attached to the materials of the case. This witness had been questioned in the course of the investigation and his name was included in the list of prosecution witnesses. The court refused the petition on the basis that it was a request for legal assistance. Some time later the defence petitioned the court to send to the UK a legal assistance request, whereby Mr Prokofiev could be questioned in the UK. Again, this petition was refused.
169.  On 30 December 2004 the defence challenged the conclusions reached by Mr Yeloyan and Mr Kuprianov, relying on the following arguments. In relation to the Apatit report, the experts had needed to study a huge volume of documents, running to more than 4,000 pages, and yet they had been able to complete the report within two days of having been appointed by the GPO. Moreover the report was drawn up on the GPO’s premises, which raised further questions as to the impartiality of the experts.
170.  The defence made three applications for Mr Yeloyan and Mr Kuprianov to be called to give oral evidence: on 11 January 2005, 21 January 2005 and 9 March 2005. Thus, on 11 January 2005 Mr Rivkin, a defence lawyer for the second applicant, argued that the defence wished to cross-examine the two experts on the forensic accounting methods that they had used in their reports, and to identify which original materials they had used in preparing their reports and to question them on their conclusions. Similar petitions were lodged on 21 January and on 9 March 2005. The defence insisted that to ensure equality of arms they should be permitted to question the two experts just as the GPO had been able to put questions to the experts when they had drawn up their reports. On all three occasions the court refused to grant the defence team’s requests. On 9 March 2005 the court ruled that there were no grounds for examination of the expert witnesses in person; the court explained that the assessment of the experts’ reports would be carried out by the court when they would withdraw to the deliberations room.
171.  On 1 March 2005 the defence petitioned the court to call Mr Shulgin, Deputy Head of the Federal Tax Service, to give evidence in court. Mr Shulgin had been questioned in the course of the preliminary investigation and was initially included in the list of prosecution witnesses. The request arose following the court’s decision to admit a letter from Mr Shulgin which sought to discredit the defence expert Mr Shchekin (in the judgment the court referred to Mr Shulgin’s letter as one of the reasons why it did not accept Mr Shchekin’s evidence). Furthermore, Mr Shulgin had previously revoked a tax audit because it had failed to take into account a directive from the Ministry of Justice and Ministry of Taxes stating that promissory notes could be accepted in 1999. His evidence therefore went to the heart of the corporate tax evasion charges. The court rejected the defence application stating that Mr Shulgin could not give oral evidence since he was a representative of the civil plaintiff (the Federal Tax Service) in that case.
(b)  Other documentary evidence
172.  In support of the charges the prosecution also referred to a large number of documents: tax-inspection reports, in-house correspondence between the companies affiliated with Yukos, bank transfer orders, charters of incorporation, etc. The defence claimed that a considerable proportion of the written evidence submitted by the prosecution should be excluded from the case file because it had been obtained unlawfully or contained serious discrepancies. The court rejected all of the defence applications on the exclusion of evidence, either in the course of the trial or in the text of the judgment itself.
173.  Thus, at the hearing of 12 January 2005 the defence asked the court to exclude evidence obtained during the searches in Zhukovka on 3 and 9 October 2003. The defence claimed that the searches had been carried out in such disorder that the persons concerned and attesting witnesses had been unable to oversee the actions of the investigative team. For example, the searches took place simultaneously on three floors of the office building. The investigators participating in the searches were moving from one room to another, leaving the premises and returning. One of the attesting witnesses, Mr Moiseyev, kept being called out of the office by the investigators. The documents seized at Mr Dubov’s office were not shown to the witnesses at the moment of their seizure but only when the witnesses returned to the room. The members of investigative team kept bringing unidentified document files to the rooms where the search was being carried out.
174.  The defence further noted that the offices of Mr Dubov, a member of the Duma, had been searched. According to the defence, the prosecution had failed to obtain prior authorisation from the State Duma and the Supreme Court, as required in such cases. The defence further claimed that the investigators had known whose offices they had been searching; there was a door sign indicating clearly that the offices belonged to Mr Dubov. The court heard two witnesses, Ms Ardatova and Ms Morozova, cleaning staff in the office building in Zhukovka, who confirmed the facts relied on by the defence.
175.  At the hearing of 17 January 2005 the defence also asked the court to exclude materials obtained as a result of the search on 9 October 2003 in the office of Mr Drel in Zhukovka. At that time Mr Drel had been the second applicant’s lead representative in the criminal proceedings. He also acted for the first applicant and had attended the first applicant’s meeting with the GPO representatives on 5 July 2003, when this applicant had been questioned as a witness in the criminal case against the second applicant. The prosecution could not have been unaware that they were searching the offices of an advocate. Despite the special status of Mr Drel, the prosecution did not obtain the special approval needed under the law. The court heard a witness, Mr Rakhmankulov, who had been present in the premises of the ALM Feldmans law firm during the search. He testified that Mr Drel had not been given access by the investigators to his office during the search. Further, Ms Pschenichnaya, a lawyer for the firm GLM Management Services S.A. was not allowed to be present during the search.
176.  Finally, the defence noted that the searches of 3 and 9 October 2003 in Zhukovka had been carried out on the basis of the single search warrant of 3 October 2003, which was against the law. They claimed that the CCrP required a separate search warrant for each search. Further, some of the documents seized during those searches were examined by the investigator and added to the materials of the case file only several months later. Finally, the defence referred to various informal terms and discrepancies in the reports on the search and seizure of documents.
177.  Based on the above arguments, the defence asked the District Court to exclude those materials from the case file. The court rejected the objections as premature. Subsequently the District Court dismissed the defence’s objections in the judgment (see Section 9 (a) below, §§ 241 et seq.)
178.  On 21 January 2005 the defence requested the exclusion of the materials seized in July-August 2003 in the course of several searches in the premises of the Menatep Sankt-Petersburg bank. The prosecution claimed that those searches had been authorised by the Deputy General Prosecutor on 8 July 2003. However, the defence claimed that only one search had been authorised by that search warrant, not several consecutive searches. On the same ground the defence sought exclusion of evidence seized during the search in the Trust Investment Bank on 11 November 2003. Further, the defence referred to various discrepancies in the search reports.
179.  On the same day the defence sought to exclude documents seized during the searches in the Trust Investment Bank on 11 November 2003 and from the Tax Inspectorate No. 5 of 5 and 16 December 2003. Thus, in the opinion of the defence, seizures from the Tax Service were unlawful as the investigator had failed to obtain the prior sanction of a prosecutor as required by law, since it was clear that the investigator had seized from the inspectorate documents containing “tax secret”.
180.  On the same day the defence also requested the exclusion of the materials obtained as a result of the search in the premises of Russkiye Investory on 29 July 2003. According to the defence, the search started at 2.20 p.m.; however, a written note on the report of the search certified that the investigator had examined the seized documents already as from 9.15 a.m.
181.  On 8 February and 10 March 2005 the defence asked the court to exclude evidence obtained from the computers seized as a result of the search in Zhukovka on 9 October 2003, namely the print-outs of computer files. The defence referred to various inconsistencies in the bill of indictment, in the list of files extracted from the computers, etc.; further, they criticised the methods which had been employed by the prosecution to extract information from the hard drives of those computers. In particular, on 22 March 2005 Mr Dumnov confirmed to the court that the electronic files from the hard drives seized during the searches of 9 October 2003 had been copied onto the “re-writable” disks provided by the GPO and transmitted to the experts without having been properly sealed. Further, attesting witnesses who were present when the drives were examined by the GPO experts had also participated in four other investigative acts, which raised doubts as to their independence. When examining the hard drives, the investigators discovered 4,939 more files than on the drives examined by the experts. There were discrepancies in the documents which recorded the particulars of the materials seized. The court rejected the objections by the defence to the evidence on the ground that those objections were premature.
182.  On 10 March 2005 the defence challenged the evidence obtained as a result of a search in the State Property Fund in Murmansk on 8 July 2003. The defence noted that the search report contained certain discrepancies as to where and when the search had been carried out.
183.  On numerous occasions the defence requested the District Court to declare prosecution documents inadmissible – in particular, because the documents were illegible, were not certified, were not translated from foreign languages, or did not meet the requirements of law. For example, on 18 February 2005 the prosecutor sought to adduce three documents, none of which met the stipulated requirements for the signature, stamp or official letterhead. The defence objected against adding such documents to the case-file, but the court dismissed the objection and the documents were admitted.
(c)  Examination of witnesses for the prosecution
184.  In the bill of indictment, the prosecution indicated that they were relying on about 240 witnesses. Out of those, 83 were examined in court. Of these, the interview records of 32 witnesses were subsequently read out at the prosecution’s request, in addition to their oral submissions. Thus, the prosecution insisted on reading out the testimonies of Mr Shchavelev, Mr Pozdnyakov, Ms Rashina, Mr Gidaspov, Mr Vostrukhov, Mr Dobrovolskiy, Ms Kuchinskaya, Mr Anilionis and many others.
185.  On 13 September 2004 the defence raised objections to the practice of reading out the records of the questioning of witnesses at the preliminary investigation stage. The defence claimed that this was possible only if there were essential discrepancies between the witness testimonies at the court hearing and those during the preliminary investigation. However, the prosecution failed to demonstrate any such discrepancies. Further, the defence claimed the court itself put pressure on witnesses Mr Schavelev, Mr Krasnoperov and others, urging them to confirm their earlier testimonies to the GPO investigators. The Meshchanskiy District Court did not accept the defence objections.
186.  On 14 September 2004 Ms Antipina was questioned before the court. She was released after partial questioning. On the same day a GPO investigator summoned and questioned her in the GPO. On 23 September 2004 Ms Antipina was again questioned before the trial court. The prosecutor put to her the same questions as those put by the investigator nine days previously.
187.  On 30 September 2004 Mr Lipatnikov testified that, before giving evidence to the GPO investigator, he had been visited by a Federal Security Service (FSS) officer who had told him what to say.
188.  On 30 September 2004 the defence filed a new objection against the practice of reading out written testimonies by prosecution witnesses and urging them to confirm those testimonies. The court dismissed that objection.
189.  On 4 October 2004 Mr Abramov was questioned by the court. At the hearing he testified, inter alia, that only some of his answers appeared in the record of his questioning by a GPO investigator.
190.  On 11 October 2004 Mr Klassen testified that he had been asked leading questions by the investigator and that the record of his testimony was not totally accurate. According to the applicants, this remark by Mr Klassen was later omitted from the trial record, although it was recorded on audio by the defence and the relevant recordings were submitted to the court.
191.  On 15 October 2004 Mr Kobzar was summoned and questioned by the GPO investigator. He was required to sign a written undertaking not to reveal to anyone the contents of that interview. On the same day he testified before the court.
192.  On 18 October 2004 Mr A. Ustinov was questioned by a GPO investigator. On the following day Mr A. Ustinov testified before the court about the same events.
193.  On 14 March 2005 the prosecution filed a motion to read out the testimony of witnesses Mr Petrauskas, Mr Stankevicius, Mr Surma and Mr Rysev on the basis that they were foreign nationals who refused to appear in court. The defence objected to the reading out of their testimony because none of the witnesses had actually been questioned in relation to criminal case no. 18/41-03. They had been questioned in relation to another criminal case that was not the subject of the trial by the Meshchanskiy District Court. The trial court rejected the defence objections and permitted the statements to be read. Subsequently their evidence was relied upon by the Meshchanskiy District Court in its judgment (pages 265 and 271-272 of the judgment). At the court hearing on 17 March 2005, the prosecution filed a motion to read out the testimony of Mr Kartashov, Mr Spirichev and Ms Karaseva as well as to read into evidence the orders to bring charges against each of them. It was said by the prosecution that the application was made pursuant to Article 281 of the RF Code of Criminal Procedure. The defence objected to the motion, as neither the testimony of accused individuals nor the decisions to charge them came within the ambit and scope of evidence that could be read out as defined by Article 281 of the RF Criminal Code. The Meshchanskiy District Court rejected the defence objections and allowed the prosecution motion. This evidence was subsequently relied upon by the Meshchanskiy District Court in its judgment (pages 501, 502-503 and 521 of the judgment).
194.  On 1 March 2005 the defence again petitioned the court to summon Mr Shulgin, the Deputy Head of the Federal Tax Service, to give evidence. As to the status of that witness, the applicants said that Mr Shulgin himself would explain in what status he would speak. On 1 March 2005 the court refused to call Mr Shulgin. The court referred to Article 56 of the Criminal Procedure Code which defines the term “witness” as “a person who knows information which is of consequence for the examination of the case”. The court also referred to Articles 44 and 45 of the Criminal Procedure Code which provided that a representative of the civil plaintiff within the criminal proceedings has a right to give evidence, but is not obliged to do so.
(d)  Materials allegedly in the possession of the GPO but not disclosed to the defence
195.  On 30 September 2004, the second applicant’s defence filed a motion in which they asked the court to require the state prosecutors to explain the reasons for the disappearance of American Express corporate cards from the case file, to take measures to obtain those cards and to add them to the materials of the case; and to present to the court documents on the basis of which the GPO concluded that the second applicant had allegedly been the head of Status Services. On 11 October 2004, the second applicant’s defence filed a motion seeking the disclosure from the archives of the Meshchanskiy District Court the criminal case against Mr Shakhnovskiy in order to find therein the American Express corporate cards on the basis of which the GPO had concluded that the second applicant was allegedly the head of Status Services, as well as other documents concerning the applicant’s activity as a taxpayer. Upon disclosure the second applicant indicated that he would ask for the originals or certified copies from the Shakhnovskiy case file to be added to his own case file.
196.  On 27 December 2004 the defence made an application for the prosecution to disclose correspondence between the GPO and the Presidential Administration relating to the Presidential inquiry of December 2003 into the sale of the 20 per cent share in Apatit. The prosecution objected, stating that, first of all, those documents were irrelevant, and, furthermore, if the defence knew that such documents existed they should have requested them from the competent authorities. The request was refused by the court. In all but one instance the requests were dismissed with no reasons given.
197.  On 28 January 2005 the defence sought disclosure of further material in relation to the acquisition of Apatit. Two letters were sought: one was a letter from the GPO to the Russian Property Fund (RFFI) dated 1 March 1999 and the other was a letter from GPO aide Mr Fomichev to Akron Plc, dated January 2003. Those letters had been mentioned in the materials of the case but had not been added to the case file. Those letters also confirmed that any dispute in respect of the acquisition of the 20 per cent block of Apatit shares raised purely civil rather than criminal issues. The defence lawyers had sought disclosure directly from the GPO. The Head of the Supervision Department of the GPO Mr Azarchenkov had replied that “all documents necessary for the fulfilment of defence may be requested by the court after discussion of the parties and granting a corresponding petition”. The court refused the application, stating that it could not see any reasons why the motion should be granted.
198.  On 9 March 2005 the defence lawyers requested disclosure of the expert report that had been allegedly commissioned by the prosecution in the context of the criminal investigation into the activities of the Lesnoy town administration (the case which had been closed in 2002). For the defence it was unclear whether this report (mentioned in some of the GPO documents, namely in the decision to re-open the case of 18 July 2003) was the same document as the study prepared by the UBRAS at the request of the Lesnoy town administration (see paragraph 30 above), the copy of which was in the possession of Mr Bochko and which had earlier been submitted to the court by the defence (see paragraph 214 below). The prosecution objected to disclosure of the expert report, arguing that the court had no power to order disclosure. On 9 March 2005 the court ruled that the defence had not specified what legal and economic review might be obtained from the materials of the 2002 criminal case. Moreover, the court noted that the expert evaluation requested had been carried in the context of a criminal case which was still at the stage of preliminary investigation. 8.  Presentation of evidence by the defence
(a)  “Expert evidence” and other materials attached to the case-file but later rejected as inadmissible
199.  The defence submitted to the court written opinions by several specialists in the areas of taxation, financial law and accounting. In particular, reports by Mr Shchekin (a professor at Moscow State University), Mr Semenov (professor of tax law at Moscow State University), Ms Petrova (a qualified auditor since 1994, professor at Moscow State University and General Director of Expertaduit, an audit firm), Mr Grechishkin (director of Audit‑Premier Limited, an audit firm) and Mr Lubenchenko (former Director of the Legal Department and then Head of the Russian Central Bank, professor of law at Moscow State University) were produced.
200.  Mr Shchekin presented two reports: one referring to the personal income-tax evasion charge and the other in relation to the corporate tax evasion charge. Both reports were collected by the defence on 10 January 2005. In his report on the company-tax evasion charges Mr Shchekin explained that it was common and accepted practice for taxes to be paid for by promissory notes in 1999; he relied in particular upon a letter of December 1999 from the Finance Minister and the First Deputy Minister of Taxes and the decision of the Federal Commercial Court of 24 December 2001. Mr Shchekin further explained that the trading companies had entered into lawful agreements with the local administration for taxes to be paid by way of promissory notes. Mr Shchekin also explained that in his opinion there was no basis for characterising the trading companies as sham companies. He indicated that the question of where the oil products traded by those companies were produced and kept was irrelevant for granting them the tax cuts. In support he referred to the decision of the Federal Commercial Court for the North-West District, which in the judgment of 5 June 2002 in case no. A42֊6604/00-15-818/01 considered the granting of tax cuts in a similar situation to be legal.
201.  Mr Semenov in his report of 7 April 2004 analysed the relevant legislation and concluded that it was not open to the tax authorities retrospectively to annul tax concessions agreed with the authorities. He further referred to the case-law indicating that what the applicants were accused of doing had been considered legitimate at the relevant time, including the non-monetary payment of tax, and that there was no negative effect on the budget because of such practice. The tax audits carried out by tax inspectorates during the period under review did not reveal any violations of the law in this respect; tax authorities registered and recorded non-monetary tax payment receipts in accordance with the established procedures (inter alia, by completing a form which was approved under Decree of 23 December 1998). He explained that the promissory notes were highly liquid securities which, bearing an interest rate of 28 per cent per annum, were well suited to constitute investments for a municipal administration. Payment on such notes was underwritten by the Doveritelny i Investsionny Commercial Bank, which entered into an agreement with the Lesnoy town authority to repurchase the securities on demand.
202.  Ms Petrova in her report of 10 November 2004 analysed standard procedures of recording on the balance sheet of tax payments, overpayments of taxes and payments of taxes in non-monetary form. Questions addressed by Ms Petrova at the request of the defence touched in particular upon the following points:
(a) the accepted procedure in 2000-2001 for entering onto the balance sheet tax payments, including overpayments of tax; and
(b) whether the fiscal bodies took into account non-monetary payments in 1999-2000.
203.  Mr Grechishkin in his report of 25 January 2005 demonstrated that the promissory notes used by the trading companies had been repaid in full and even in excess of their nominal value, and that the companies had only paid taxes by way of promissory notes in 1999.
204.  Mr Lubenchenko in his report of 30 December 2004 gave his opinion on the lawfulness of the issuing of the indemnity bonds by Menatep within the privatisation auction concerning 20 per cent of shares of Apatit.
205.  The above reports were submitted by the defence to the court on various dates in January – March 2005. The reports were initially admitted by the court to the materials of the case. However, the court later declared those reports inadmissible as evidence (see the summary of the judgment in Section 11 (b) below).
(b)  Materials attached to the case file but later discarded as unreliable
206.  On 8 February 2005 the court accepted from the defence a series of documents in relation to the Lesnoy town trading companies. These were reports of tax inspections conducted by the Lesnoy tax inspectorate, with the attached documents regarding the number of staff working in the trading companies Business Oil, Mitra, Forest Oil, and Wald Oil; staff pay-sheets; notes regarding real-estate assets, etc. Documents showing the payments of all promissory notes and the absence of any litigation between the Lesnoy town administration and Yukos between 1999 and 2004 were also included in the materials of the case file. Those materials related to the issue as to whether the companies were bona fide trading companies or sham companies as alleged by the prosecution, and whether any damage was sustained by the State or municipal budget. The court later discounted that evidence in its judgment as unreliable (see Section 9 (b) below, §§ 261 et seq.).
(c)  Materials not attached to the case file
207.  On 27 December 2004 the defence filed a request to add to the case file several documents, in particular:
(a) a study from which it could be seen that in 1999-2003 proceeds from sale of products, works and services by Yukos amounted to USD 50.569 billion, out of which the profit amounted to USD 15.821 billion. These documents demonstrated that during that time shareholders directed USD 13.193 billion to the development of Yukos. In the opinion of the defence, it undermined the position of the prosecution as to the applicants’ motives, and, in particular, the mercenary intent, in the absence of which there is no criminal liability;
(b) a letter from the Director of the Achinsky refinery which stated that Mitra (one of the trading companies) was not the management company of the Achinsky refinery, as had been alleged in the bill of indictment. That response refuted the allegation of the prosecution to the effect that the applicants had controlled all transactions posted to Mitra, Business Oil, Wald Oil and Forest Oil, “as evidenced inter alia by the fact that Mitra was the managing company of Achinsk Refinery”;
(c) documents demonstrating that the applicants had been paid dividends on shares in Yukos for 1999, 2000, 2001 and 2002, showing the amounts of the dividends and the income tax paid. The defence claimed that those documents were important for tax evasion charges;
(d) copies of the defence’s requests and responses thereto confirming provision of managerial and consulting services by the applicants (in connection with the personal tax evasion charges);
(e) written answers by Mr Prokofiev, the first applicant’s former interpreter, to the questions put to him by the defence. Mr Prokofiev lived in London and was thus unable to testify personally.
The court refused to admit those documents to the materials of the case. In particular, as regards the written statement by Mr Prokofiev, the court indicated that the latter had not been duly informed by the defence about his procedural rights. The court considered that the questioning of a witness abroad should have been conducted within special proceedings, namely by rogatory letters from a Russian court to a British court.
208.  On 28 December 2004 the defence asked to have other documents attached to the materials of the case. Those documents included:
(a)  the response of the Lesnoy Tax Inspectorate, which included a tax report on Business Oil dated 7 March 2000, concluding that the company had not committed any violations of the Tax Code;
(b)  confirmation from the Lesnoy town Finance Department that it had suffered no damage as a consequence of the payment of taxes by way of promissory notes in 1999, that no payment of taxes with promissory notes occurred in 2000, and that in 1999 the Lesnoy town administration accepted promissory notes from at least 55 other taxpayers;
(c)  official documentation of the Duma of the Town of Lesnoy from 1 July 1998 to 31 December 2000 concerning the granting and use of tax benefits for all types of taxes by all taxpayers that were legal entities located in the ZATO of the Town of Lesnoy. Those documents would refute the prosecution’s argument that those benefits were obtained unlawfully;
(d)  a lawyer’s request and the response thereto from the Economic Development Ministry concerning the methodology for valuation of damages to the state caused by the non-return of the stake in Apatit. The response was relevant to the Apatit charges against the applicants;
(e)  a copy of a letter from the Chairman of the Russian Federal Property Fund, Mr Malin, to the Chairman of the Russian Government, Mr Kasyanov, which set out in detail all the circumstances surrounding court proceedings between the Murmansk Regional Property Fund and Volna related to dissolution of the sale contract for the 20 per cent stake in Apatit;
(f)  a copy of a letter of 3 March 2003 from Deputy Finance Minister to the Russian Federal Property Fund which said, in particular, that in evaluating the alleged damage to the Russian budget and the non-return of the 20 per cent stake in Apatit resulting from non-fulfilment by Volna of its investment obligations, the applicable law was Federal Law No. 152 of 29 July 1998 (“On Valuation Activities”), and in the event of a dispute concerning reliability of the size of a valuation or another value, that dispute should be considered by the Commercial Court in accordance with the established jurisdiction or in the procedure established by the law regulating valuation activities;
(g)  a copy of a letter to the Ministry for Natural Resources of 27 February 2003, which said that a review of the established conditions for subsoil use and compliance with environmental law revealed no violations by Apatit;
(h)  a copy of the lawyers’ requests and responses thereto from the Meshchanskiy District Court and the Moscow City Court concerning the disclosure of the American Express cards from the Shakhnovskiy case file. In doing so, the defence sought to demonstrate that the defence had exhausted all the options for obtaining the American Express corporate cards or at least information concerning their whereabouts. It was submitted as the court had previously denied a defence motion for the disclosure of the Shakhnovskiy case file from the archives of the Meshchanskiy District Court, in particular on the ground that the defence had not exhausted its options for obtaining those cards through their own efforts.
All of the above applications were refused and the documents were not admitted to the case file. The court referred in particular to the fact that the text of the response of the Tax Inspectorate was unclear and that the attached tax review did not have the proper official stamp on it. As to the other documents, the court refused to admit them referring to Article 286 and 252 of the Code of Criminal Procedure.
209.  On 21 January 2005 the defence produced a report by Mr Gulyaev (a professor at the Moscow Academy of Economics and Law) concerning the legality of the searches conducted within the pre-trial investigation of the case. Mr Gulyaev commented on the necessity for each search to be the subject of a separate warrant from an investigator. The District Court refused to attach that report to the case stating that Mr Gulyaev had commented on matters that were exclusively for the court to determine.
210.  On 7 February 2005 the defence petitioned the Meshchanskiy District Court to have a letter from the Commercial Court of the Chita Region admitted to the case-file. The letter concerned Investproekt, the successor company to the Lesnoy town trading companies. It indicated that the Commercial Court’s decision to dissolve the company Investproekt and remove it from the tax register had not been annulled or challenged by anyone as at the date of the letter. The Commercial Court of the Chita Region confirmed that its decision was still in force. Despite that decision the tax authorities reinstated Investproekt in the register. The defence considered that the decision of the Commercial Court was relevant to the company income tax evasion charges faced by the applicants.
211.  On 8 February 2005 the court refused the request on the ground that the letter had been incorrectly certified, in that the signature had not been verified by an official seal. The defence wrote to the Commercial Court of the Chita Region, asking it to send a reply sealed with an official court stamp. The Commercial Court replied that official regulations expressly prohibited such letters being stamped.
212.  On the same date applications were made by the defence to admit documents from the Rating Agency which demonstrated the creditworthiness of Most Bank at the material time, and a letter from the Moscow department of the Tax Service confirming that at the material time Most Bank was appropriately licensed. The defence needed those documents to prove that the promissory notes from Most Bank had real market value. The court refused to grant the applications because the documents were deemed to be irrelevant to the case.
213.  The court also rejected an application to admit documents from Metamedia on the purchase of the building at 5/1B Palashevskiy Lane, Moscow. The documents were two court decisions provided by Metamedia which confirmed that the transactions were lawful. The defence claimed that the purchase of that building was supposed to cover Most Bank’s debts to Yukos on account of money transfers made in 1999 and 2000.
214.  On 1 March 2005 the court heard an expert witness proposed by the defence, Mr Bochko. Mr Bochko was the Deputy Head of the Institute of Economics of the Urals Branch of the Russian Academy of Sciences (UBRAS); he had participated in 2002 in the preparation of the “technical and economic study” by the UBRAS (see paragraph 30 above). That study had been seized by the GPO but not attached to the case materials. Mr Bochko produced a copy of that report to the court; the defence asked the court to attach it to the materials of the case. That study concluded that, far from causing any damage, the granting of the tax concessions had been positively beneficial. The granting of tax concessions had made it possible to rescue the Lesnoy town economy from a state of permanent crisis. In particular, the experts concluded that the refund of tax overpayments by Yukos promissory notes “had not caused damage to the town and federal budgets” and that the Lesnoy town trading companies had been entitled to pay tax in advance since this was the “unconditional right of a taxpayer”. Further, the experts concluded that the Lesnoy town administration was entitled to accept tax payments by way of promissory notes in 1999. The report also came to a conclusion that the trading companies registered there were all lawfully entitled to claim tax exemptions under the federal law relating to taxation in closed administrative territories.
215.  On 5 March 2005 the defence produced to the court the reports from Ernst and Young, which valued the 20 per cent stake holding in Apatit as in 1994 and 2002, and analysed the investment programme that the Lesnoy town undertook from 2000 onwards. With that report the defence sought to prove that the town had not suffered any damage.
216.  On 14 March 2005 the defence produced to the court a report from Price Waterhouse Coopers, which analysed the sale price of apatite concentrate by Apatit to a number of Russian trading companies for the period 2000 to 2002 from the perspective of the requirements of Articles 20 and 40 of the Tax Code. The report concluded that in the relevant period Apatit fixed its prices at a level 23 per cent higher than world companies performing similar activity which were recognised as Apatit’s competitors. The defence argued that as such the report was of great importance in establishing the extent of the alleged loss and was clearly relevant to the Apatit charges against the applicant.
217.  By the rulings of 1 March (in relation to the UBRAS report), on 4 and 5 March (in relation to the Ernst and Young report), and 14 March 2005 (in relation to the Price Waterhouse Coopers report) the court refused to admit those reports to the materials of the case file.
218.  In particular, as to the study obtained from Mr Bochko (UBRAS report), the court held that it had been prepared at the request of third persons, and that it contained elements of legal analysis, and that the report could not be qualified as “expert” or “specialist” reports within the meaning of the CCrP. It also did not qualify as “other documents” which a party may wish to attach to the materials of the case.
219.  As to the report by Ernst and Young, the court first referred to a number of informalities in the report itself, in particular to the fact that the report mentioned the names of two persons who contributed to the report, but in fact other specialists of the Ernst and Young had also participated in its preparation. The report did not mention their names and was not signed by them. Mr Gage, a partner with Ernst and Young who testified before the court, named those persons in his oral submissions, but since they had not signed the report, it was impossible to establish their role in the preparation of the report and their qualifications. The only signature on the report was that of the general director. Furthermore, the report had been obtained at the request of ALM-Feldmans law firm, which was not participating in the criminal proceedings. The cover-letter with which that report was forwarded to ALM-Feldmans was irrelevant. Finally, the report contained analysis and therefore did not qualify as a “document” within the meaning of the CCrP. Similarly, it could not have qualified as an opinion of a “specialist” within the meaning of the CCrP.
220.  As to the report by Price Waterhouse Coopers, the court observed that the defence did not indicate to what type of evidence listed in the CCrP that report belonged. That report was originally commissioned by Apatit outside the criminal proceedings in the applicants’ case, so it could not be considered as an expert report or a report by a specialist. Furthermore, the conformity of the copy of the report was certified by a manager of Apatit and not by Price Waterhouse Coopers itself, and did not contain signatures of the persons who had conducted the examination. That report also contained opinions on legal matters.
221.  After the court’s rulings that those reports were inadmissible as “expert reports” the defence made a further application on the basis that the reports came within the category of “other documents” within Articles 74 (2) (6) and 84 of the CCrP. Again, the Meshchanskiy District Court rejected the defence application.
222.  On 14 March 2005 the defence produced a report by Mr Pleshkov, a senior economist in the Giperruda research institute. He produced an expert opinion (called “technical-economic assessment”) on the economic feasibility of the investment programme to the privatisation plan for Apatit. On the same day the court refused to admit this document in evidence. The court noted that the “other documents” mentioned in Article 74 of the CCrP had to have relevance for the case. Having reviewed the report produced by Mr Pleshkov the court concluded that it “contained opinions of certain persons based on investigations and qualification of the documents on the questions provided by the defence, a part of which were questions of legal character”. Consequently, the court did not accept this “assessment” as evidence. Furthermore, the court noted that the CCrP did not provide with such method of collecting evidence as “commissioning a study”. As to the other documents submitted by the defence together with the report by Mr Pleshkov, the court ruled that they “were of no importance for the criminal case”.
223.  On 16 March 2005 the defence filed a new motion with the District Court attaching a reply from the Commercial Court of the Chita Region confirming that the affixing of a stamp was not permitted by the official regulations. The court again refused to uphold the defence’s motion, claiming that a stamp was essential in all instances and that, moreover, the Russian Federation emblem on the official form used by the Commercial Court was not depicted on a heraldic shield as required by the relevant legislation.
(d)  Examination of “experts” and other witnesses for the defence
224.  On 17 January 2005 the second applicant’s lawyers advised the court that they would not be calling witnesses for the defence, out of fear of repressive measures which could be taken by the prosecution against those persons if they testified before the court.
225.  Nonetheless, a number of witnesses for the defence were heard by the court at the request of the defence. Thus, several experts whose written opinion had been submitted to the trial court gave oral testimony.
226.  Thus, Mr Shchekin was questioned in court on 17, 18, 20 and 21 January and on 14 March 2005 with regard to tax law and its implementation. The court repealed a number of questions put to Mr Shchekin by the defence as irrelevant or relating to legal matters in which the court had no need of anyone’s opinion.
227.  Ms Petrova was questioned on 24 January 2005 about the content of her report.
228.  Mr Semenov was questioned on 25 January 2005. He commented on the lawfulness of the non-monetary method of payment of taxes, which included payment by promissory notes. A part of the defence questions to Mr Semenov were dismissed by the court.
229.  On 28 January 2005 the first applicant personally addressed the court, explaining why, in his view, questioning of expert witnesses on the issues of tax law, book-keeping and business and financial practices was important for the case.
230.  Mr Bochko was questioned on 1 and 2 March 2005. He was asked by the defence to give evidence on two inter‑related areas concerning the “tax-minimisation” schemes used by Yukos and involving companies registered in Lesnoy. The defence lawyers first asked the witness whether the town of Lesnoy had suffered any damage in accepting payment of taxes by way of promissory notes and, secondly, questioned him on the investment programme in the town. However, the court dismissed those questions. The court said that the first area of questioning related to a domain where the court did not need any external opinion (legal analysis), whereas the second area was irrelevant.
231.  On 3 and 4 March 2005 the court heard evidence from Mr Myasnikova, an official from the Financial Department of the Lesnoy town administration. The court prevented Ms Myasnikova from answering a question by the defence lawyer as to whether other companies paid taxes by way of promissory notes. During the cross-examination of Ms Myasnikova, the prosecutor repeatedly referred to charges being brought against Mr Ivannikov, the Mayor of Lesnoy.
232.  On 4 and 5 March 2005 the court heard Mr Gage (a partner with Ernst and Young) who was questioned about the methods he employed while preparing the report on the market evaluation of the 20 per cent block of shares in Apatit, proposed by the defence for its inclusion in the materials of the case (see paragraph 215 above).
233.  On 23 March 2005 the prosecution informed the court that the GPO planned to bring charges against one of the witnesses called by the defence, Ms Myasnikova.
234.  The defence also examined Mr Lubenchenko, Mr Grechishkin and Mr Pleshkov. According to the applicants, the defence’s attempts to question those witnesses were severely restricted.
235.  On 25 March 2005 the defence advised the court that, following the prosecution’s closing submissions, the defence would need five days to prepare a reply.
236.  On 30 March 2005, after the prosecution had presented their closing submission, the defence confirmed that it would need five days to prepare a reply. The court ordered that the trial would continue at 9.30 a.m. on 1 April 2005.
237.  On 27 April 2005 the Meshchanskiy District Court declared that it would deliver its judgment on 16 May 2005.
238.  Between 16 May and 31 May 2005 the court read out its judgment. In all the trial lasted from 8 June 2004 until 31 May 2005 and the court sat for 159 days. During the trial, 34 further volumes of materials were added to the case file (fifteen volumes of the trial record and nineteen volumes of motions, expert reports and other documents added during the trial).
239.  The Meshchanskiy District Court delivered two separate judgments. The first judgment concerned the allegation of misappropriation of Apatit shares (see Section 2 (a) above, §§ 91 et seq.). The court found the applicants guilty as charged; however, because the crime had been committed more than ten years previously, namely in July 1994, the court applied the statute of limitations and relieved the applicants from criminal liability. The text of that judgment runs to 90 pages.
240.  The second judgment related to the other charges against the applicants, which were not time-barred (hereafter – the “principal judgment”). That judgment is 660 pages long; it may be summarised as follows.
(a)  Admissibility of evidence produced by the prosecution
241.  The court analysed objections raised by the defence as to the admissibility of evidence submitted by the prosecution and dismissed all of them.
242.  In particular, the court dismissed the complaint about multiple searches carried out on the basis of a single search warrant. The court held that this had been a lawful practice. Further, the court decided that the discrepancies in the report on the search in the premises of the State Property Fund in Murmansk had been the result of a typing error. In fact, the documents were seized and examined in Murmansk and not in Moscow. The court also noted that the report on the search of 9 July 2003 in Apatit’s premises indicated that the documents seized during that search had been examined by the investigators on 10 June 2003. The court considered that this had been a typing error too. The report of the search in the premises of Russkiye Investory also contained a discrepancy: it indicated that examination of the documents seized in the search had started before the documents had been seized. The court decided that this was yet another typing error.
243.  The court refused to exclude evidence obtained as a result of the searches of 3 and 9 October 2003 in Zhukovka. The court found that the searches in Zhukovka had been carried out in full compliance with the law.
244.  As regards evidence obtained from Mr Drel’s office in the premises of the ALM-Feldmans law firm, the court indicated that the CCrP did not prohibit searching the premises of a law firm without a court order as the defence suggested. Further, according to the search warrant, the search “was not carried out in respect of Mr Drel personally but in the business premises”. Finally, the court noted that the investigators did not know that they were searching in the premises of a law firm. None of the lawyers who were present during that search asked the investigators to allow them to participate in the searches. The District Court noted that a search was an urgent measure. In the court’s opinion, the investigators had learnt that they had been searching in the offices of a lawyer “from V.V. Moiseyev, who participated in the search, but who did not produce any documents to support this fact”.
245.  As to the searches in other premises, the court decided that they had been conducted in an orderly and lawful manner. The court referred to the statements by Mr Uvarov and Mr Pletnev, members of the investigative team, who had participated in the searches. The court held their testimony for truthful since they “had no reasons to give false testimony”. The court further held that several attesting witnesses had participated in the searches and were able to supervise their progress. As to the statements by Ms Ardatova, Ms Morozova and Mr Rakhmankulov, relied on by the defence, the court discounted them. The court considered that those witnesses were partial, since they had been working in the firms which provided services to Yukos’ management. The court also noted certain discrepancies in their testimony and the fact that although they had been free to make notes in the search report on any irregularity they had not done so.
246.  The court further dismissed the objections raised by the defence in respect of the information obtained from the hard drives seized by the prosecution in Zhukovka. The court held that the statement by Mr Rakhmankulov, who confirmed the defence’s version of events, was unreliable and contradicted the testimony of Mr Pletnev and Mr Dumnov, the latter being one of the two experts who had examined the drives at the request of the prosecution.
247.  The court dismissed several other requests from the defence seeking to have excluded evidence submitted by the prosecution. The court also analysed the testimonies of several witnesses called by the defence, but held that their testimonies did not contradict the findings of the court as to the applicants’ guilt.
(b)  Admissibility of evidence produced by the defence
248.  In the principal judgment the court also analysed evidence produced by the defence.
(i)  Inadmissible “expert evidence” produced by the defence
249.  The court held that the written expert opinions by Mr Shchekin, Ms Petrova, Mr Semenov, Mr Lubenchenko and Mr Grechishkin were inadmissible as evidence. The court’s reasons can be summarised as follows.
250.  First, in the opinion of the court, under Article 86 the defence did not have the right to collect evidence in the form of written opinions of the “specialists” (spetsialisty, p. 621 of the judgment).
251.  Second, the law provided in Article 58 of the CCrP that a prospective “specialist” should be notified about his or her rights and obligations by the persons vested with such a right by the current law of procedure, which do not include the defence lawyers or the expert themselves. The court noted that the written opinions produced by those persons contained entries that such rights had been known or had been explained to them by the defence lawyers. However, even if the lawyers had notified some of the “experts” about their procedural rights, that notification was not valid.
252.  The third argument concerned the reports by Mr Shchekin, Mr Semenov and Mr Grechishkin. As followed from those reports, their authors had reached their conclusions on the basis of materials from the case file which had not been “duly certified”. They based their conclusions on the documents which they believed were from the materials of the criminal case; however, those persons were not allowed to study the official copy of the materials submitted by the prosecution to the trial court and they had to rely on the copies produced to them by the defence lawyers. As to the report of Mr Shchekin, the court also noted that he had at his disposal some additional documents which were not a part of the case-file.
253.  The fourth argument was that those persons had given their opinion on points of law, which was not within their competence. The court noted that those reports touched upon questions of guilt, intention, assessment of arguments of the prosecution, as well as evidence produced to the court, and interpretation of the applicable legislation. All that, in the opinion of the court, was not within the terms of reference of the experts under the CCrP.
254.  The fifth argument concerned the reports by Ms Petrova and Mr Lubenchenko. The court observed that those experts had been engaged by relatives of the applicants who were not a party to the proceedings and who had not therefore had a right to collect evidence.
255.  As to the research by the UBRAS, the District Court said that since it had not been specially commissioned for the criminal trial it was inadmissible.
(ii)  Inadmissible documentary evidence
256.  The court further ruled that some of the documents submitted by the defence, namely the charter of incorporation of Status Services, and the list of staff of that company (which had paid the second applicant for his consulting services) were inadmissible, since they had been obtained in breach of Article 53 of the CCrP. Further, the court noted that the content of those documents did not contradict the findings of the court that the second applicant was the head of that company.
(iii)  Inadmissible oral evidence
257.  The court further dismissed oral testimony by Mr Shchekin, Mr Semenov, Mr Lubenchenko and Ms Petrova as inadmissible evidence. The court held it to be inadmissible because those persons had never worked for the tax authorities or in audit or accounting firms. They were lawyers, and the court did not need their opinion on legal matters. Furthermore, the court noted that Mr Shchekin had represented Yukos in the commercial courts.
258.  The court took note of Mr Bochko’s testimony, but only to the extent that it concerned his participation in the preparation of the UBRAS report. At the same time the court refused to admit in evidence Mr Bochko’s testimony concerning the substantive conclusions of the report.
259.  The court admitted testimony by Mr Gage about the methods used by Ernst and Young in evaluating 20 per cent of the shares in Apatit. The court, however, noted that that testimony was “general in nature” and did not contradict the court’s earlier findings. As such, audit reports submitted by the defence had not been admitted.
260.  The court also admitted Mr Pleshkov’s testimony about the Apatit investment programme. In the court’s view, the evidence by Mr Pleshkov did not contradict the court’s earlier findings. Finally, the court admitted testimony by Mr Grechishkin concerning his contacts with the applicant’s lawyers but not on other points.
(iv)  Unreliable documentary evidence
261.  The court took note of certain documentary evidence submitted by the defence. In particular, the court examined the tax reports by the Lesnoy Tax Inspectorate, lists of staff working in the Lesnoy trading companies, documents concerning the activities and assets of those companies, letters from the Lesnoy administration, etc. However, the court discounted this evidence as unreliable. The court noted, in particular, that the acting head of the Tax Inspectorate and the Mayor of Lesnoy were under criminal investigation for granting improper tax cuts. Further, the court found that the documents submitted to the court concerning the activities of the trading companies had not existed at the relevant time, when the inspections of those companies had been carried out.
262.  The court also examined the documents confirming the honouring the promissory notes received by the Lesnoy town administration from the trading companies. The court discounted that evidence, stating that the companies which had confirmed the authenticity of the promissory notes were controlled by Yukos, and were not therefore a reliable source of information. The court also discounted a number of documents, letters and certificates issued by the Lesnoy administration, and several expert opinions. The court considered that the entities which had provided the documentary evidence in question had been dependent on the applicants. It also noted that the defence had not relied on those documents during the preliminary investigation.
263.  The court discounted documents submitted by the bankruptcy administrator of Most Bank with regard to the payment of promissory notes by Byron, Osmet-1, Sard-1 and GM-2. The court noted that those documents did not contain information as to when and how the promissory notes were paid, and were therefore unreliable.
264.  The court finally admitted and analysed a large number of other documents produced by the defence. However, the court concluded that none of them could affect its findings as to the facts of the case, or change their legal characterisation.
(c)  Findings of the Meshchanskiy District Court on the merits
(i)  Criminal charges
265.  The Meshchanskiy District Court found both applicants guilty as charged (see Section 2 points (b) – (j) above, §§ 97-118). In particular, the court found that the companies involved in the transactions with shares of the privatised enterprises, the trading companies registered in Lesnoy and other low-tax zones, as well as foreign companies which paid fees to the applicants had in fact been sham legal entities with no real business purpose. Most of the persons who had set up those companies on their behalf worked at Yukos, Menatep, Rosprom, and other affiliates of Yukos. In that capacity those persons were subordinated to the applicants. Further, the sham companies had no financial resources of their own, but operated with the financial support of Menatep, Rosprom, and Yukos. The sham companies did not have premises or personnel; they did not make a profit and some of them had been definitively liquidated or abandoned. Therefore, the sham companies were created solely for participation in the sham transactions; they were controlled by the applicants through their personal friends or subordinates.
266.  The conclusive paragraphs of the judgment in respect of the company-tax evasion read as follows:
“As a result of the aforementioned actions, the aforementioned companies which de facto did not carry out any commercial activities in the territory of the [Lesnoy Town], obtained a right to preferential taxation. Later, using this circumstance, through the CEOs of the aforementioned companies controlled by them, [the applicants]... arranged the filing of the 1999 and 2000 tax returns of the aforementioned companies with the Tax Inspectorate for Lesnoy town, having deliberately included in them false information that tax privileges were assessed and they had no tax arrears; as a result, budgets of various levels did not receive taxes in the aforementioned amount. Also, with a view to evading paying taxes, in violation of the requirements of the current tax legislation ..., [the applicants] arranged for the payment of taxes by the aforementioned companies using promissory notes from Yukos, which cannot be deemed to be in compliance with the statutory requirements to pay mandatory taxes. Later, out of the “overpayment” which built up in the aforementioned manner, netting operations for the following tax periods were also carried out. Furthermore, with a view to evading paying taxes, the defendants arranged non-filing by the aforementioned companies controlled by them of the 2000 balance sheet with the Tax Inspectorate, the filing of which is mandatory under Art. 23 of the Tax Code, and non-inclusion in the companies’ tax declarations of the information about the companies’ actual tax arrears. By means of the aforementioned actions, [the applicants] organized tax evasion ...”
267.  As to the amounts of unpaid taxes, the judgment of the Meshchanskiy District Court mentioned the following figures. In 1999 Business Oil obtained unlawful tax cuts in the amount of RUB 1,217,622,799. In 2000 Business Oil obtained unlawful tax cuts in the amount of RUB 1,566,046,683. Further, the four trading companies (Business Oil, Vald Oil, Forest Oil and Mitra) paid in 1999-2000 taxes with promissory notes. On that last point the judgment repeatedly referred to various amounts of unpaid taxes for different tax periods and for each company (p. 49-50 of the judgment). Figures of tax underpayments indicated in various parts of the judgment did not always match other figures concerning the same periods and operations of the same trading companies and did not fit to the overall result indicted in the conclusive paragraphs of the judgment concerning company income tax evasion charges. No explanation for those discrepancies was given in the judgment.
268.  When analysing the applicants’ involvement in the unlawful tax refund scheme, the District Court indicated, on page 51 of the judgment, that “by 2000 promissory notes of Yukos worth RUB 1,048,391,487 still remained not honoured”. The District Court found that the applicants had fraudulently obtained from the State budget RUB 407,120,540 through that scheme. In support of its conclusions on the corporate tax evasion charges the judgment referred inter alia to documents seized from Trust Investment Bank (p. 488 of the judgment).
269.  On page 521 of the judgment the District Court indicated that in 1999 the applicants evaded taxes in the amount of RUB 5,447,501,388 (that figure included tax cuts obtained by Business Oil plus payment of taxes by the four companies, including Business Oil, with promissory notes), and that in 2000 they evaded taxes amounting to RUB 11,947,947,894 (again, it included tax cuts granted to Business Oil and the amount of promissory notes transferred by the four trading companies to the budget). The overall amount of unpaid taxes for 1999-2000 was therefore RUB 17,395,449,282.
270.  On the personal tax-evasion charges the District Court confirmed the account contained in the bill of indictment. In particular, to demonstrate that service agreements concluded between the applicants and the two Isle of Man companies, namely Status Services and Hinchley, were not real, the judgment referred to the memo prepared by Ms Kantovich on behalf of Mr Alexanyan which had been addressed to the first applicant and described the “individual entrepreneur” scheme. The judgment also referred to corporate credit cards issued in the name of the second applicant as the head of Status Services Limited and discovered during the search in his house on 3 October 2003 in Zhukovka. Documents seized from Tax Inspectorate No. 5 were also referred as proof of the applicants’ guilt concerning the personal tax evasion charge (pp. 475-478 of the judgment).
271.  In support of its conclusions on the episode concerning the embezzlement of Apatit’s benefits and in relation to the corporate tax-evasion charges the Meshchanskiy District Court relied, inter alia, on documents seized from Mr Drel’s office in Zhukovka. The court also referred in this respect to some of the print-outs from the hard drives seized during the searches. In turn the trial court stated that the applicant’s guilt was confirmed by the “conclusions of the complex accounting-economic expert examination, the results of which show the net profit of Apatit for the period 2000-2002 in case apatite concentrate was sold independently, without intermediaries at purchasing prices of consumer plants, and at USD 45 per tonne on FOB terms to Murmansk in case of export, would have increased by RUB 6,168,043,000, including: in 2000 - by RUB 2,840,223,000, in 2001 - by RUB 1,956,565,000, in 2002 - by RUB 1,371,255,000” (p. 322 of the judgment). In support of its conclusions on the episode concerning misappropriation of Apatit benefits the District Court referred, inter alia, to the valuation of the Apatit product made by Mr Yeloyan and Mr Kuprianov in their report of 16 August 2003.
(ii)  Civil claims
272.  The District Court also ordered the applicants to pay to the State RUB 17,395,449,282 on account of unpaid company taxes, to be recovered from both applicants on a solidarity basis. The District Court’s judgment in the part related to civil claims run to eight lines and did not contain any calculation of the amount of damage caused to the State by the applicants’ failure to pay company taxes. The judgment in this part did not refer to any provision of the law.
273.  The civil claims of the Tax Inspectorate no. 5 concerning personal income tax evasion were left without determination; the District Court ruled that those claims should be examined by a court within separate civil proceedings.
274.  From the judgment it appears that the amount claimed by the Tax Service under the head of unlawful tax refund (RUB 407,120,540) was not recovered from the applicants.
(d)  Evidence mentioned in the judgment but not presented to the defence during the investigation and trial
275.  The applicants claimed that certain pieces of evidence, referred to by the Meshchanskiy District Court in its judgment, had never been produced to the defence for examination in adversarial proceedings. In particular, the judgment referred to:
(a) the second applicant’s income and expenditure book for the year 2000;
(b) the letter from ZAO Yukos RM of 11 August 2000;
(c) American Express credit cards said to have belonged to the second applicant; and
(d)  alleged contracts between the second applicant and Status Services.
(e)  Sentence
276.  In conclusion, the District Court sentenced both applicants to nine years’ imprisonment in an “ordinary regime correctional colony”.
277.  Within 10 days of the conclusion of the reading of the judgment, the defence teams submitted a “short” version of their appeal to the Moscow City Court. The full grounds of appeal could only be prepared after studying the trial record.
278.  According to the Government, on 7 June 2005 the first applicant received a copy of the judgment in the case.
279.  On 28 July 2005 the defence team was notified by Judge Kolesnikova (the presiding judge) that they could commence studying the trial record in order to check its accuracy. Between 29 July and 8 August 2005 the defence was permitted access to volumes 1-15 of the original trial record in the premises of the Meshchanskiy District Court. However, the applicants’ lawyers were not able to read all of the 30 volumes of the trial record. In particular, the defence was not given access to the volumes containing documents attached to the case-file during the court sessions and copies of the rulings delivered by the court after retiring to chambers. The applicants’ lawyers were told that they could not have access to the remaining volumes as they were being used by the prosecutor.
280.  On 5 August 2005 a copy of the fifteen volumes of the trial record, prepared by the Meshchanskiy District Court on its own initiative, was made available for the defence (5,565 pages). The copies of the record were not certified and they had no internal numbering or index. According to the Government, the defence was given the following time-slots to study the trial record: from Monday to Thursday, between 9 a.m. and 6 p.m., and on Friday, between 9 a.m. and 4.45 p.m. Every lawyer had been given his own copy of the trial record.
281.  The defence lodged an application to review the original of the trial transcript but the court did not respond to that application.
282.  In early August it became known that the first applicant intended to stand for election to the State Duma of the Russian Federation.
283.  On 8 August 2005 the first applicant was transferred to another block in the detention centre, to a cell containing 16 detainees.
284.  On 9 August 2005 Judge Kolesnikova informed the defence by fax that the last date for submitting comments on the hearing record was 25 August 2005. In reply the first applicant wrote a letter to Judge Kolesnikova in which he asked for additional time. In particular, he described the conditions in which he had to study the trial record as follows:
“I am forced to study the protocol in an investigative room together with my lawyers or in the cell where I am currently being held. However, I can hardly do it in the cell because there are more than 10 more people in this cell, and they are, of course, speaking loudly to one another, many of them are smoking (I personally don’t smoke), eating, and relieving themselves, in other words, creating a situation in which it’s extremely difficult to focus on the protocol.
As to the conditions of studying the protocol in the investigative room together with my lawyers, I’d like to note the following. Every day the lawyers are allocated one and the same investigative room to meet with me. This room is unventilated with a totally sealed double-pane window, without air-conditioning and any ventilation whatsoever. The room has a table, which is too small to hold all the documents necessary to be able to work on the protocol, and two chairs, which are not enough either because I’m visited by up to five lawyers at the same time. Meanwhile, adjacent investigative rooms are vacant and have a lot of chairs. In this situation, allocating one and the same investigative room gives reason to assume that it is equipped with some special technical devices ruling out confidential communication between me and my lawyers. ... By today, I managed to study only 4.5 volumes out of the 15 volumes of the “copies” of the protocol that I had been given. To speed up the familiarisation ... I have to refuse the daily open-air walks ...”
285.  From 9 August 2005 the defence lawyers repeatedly sent telegrams and letters to the Meshchanskiy District Court requesting that the defence be allowed to examine the original trial record. However, the defence received no reply to those requests.
286.  On 15 August 2005 Ms Moskalenko, one of the defence lawyers, complained to the Meshchanskiy District Court about the improper conditions in which she had to review the trial record with the applicant.
287.  On 19 August 2005 the defence submitted to the Meshchanskiy District Court audio recordings made by the defence in the course of the trial. Judge Kolesnikova returned the audio recordings to the defence, claiming that the case was closed and that nothing could be attached to the case materials.
288.  On 23 August 2005 Judge Kolesnikova dismissed a request for additional time to review the trial record, asserting that the applicant and his lawyers had been given sufficient time.
289.  On 24 August 2005 the defence lodged comments on the volumes of the trial record to which they had been given access. The comments ran to 126 pages. In the applicant’s words, the trial record contained certain inaccuracies, some of which were relatively minor, whereas others were much more significant. Thus, entire paragraphs were missing from the trial record. The applicant gave as an example an episode in which the court discussed time arrangements for the hearing. That episode was not included in the trial record. Further, there were numerous omissions in the record of questioning of certain important witnesses (such as, for example, Mr Klassen, who had told the court about the investigator’s selective approach to the questioning).
290.  On 26 August 2005 the prosecution informed the defence about the decision taken by the Acting Chairman of the Meshchanskiy District Court, Mr Kuryukov, to fix the date of the appeal hearing on 14 September 2005.
291.  On 2 September 2005 Judge Kolesnikova issued a decree dismissing all of the points raised by the defence, with the following reasoning:
“The comments on the trial record are not based on fact – i.e. the trial record was made by court secretaries in the very course of the court proceedings, and all comments made by participants, their statements, motions, all documents examined and disclosed, witness testimony, questions and replies to those questions, as well as to the order of court proceedings, etc, have been recorded accurately and in their entirety”.
292.  On 9 September 2005 the defence submitted a number of motions to the Moscow City Court, requesting that evidence which had been excluded or discounted by the Meshchanskiy District Court be re-considered at the forthcoming appeal. The motions, inter alia, concerned the report by Ernst and Young in relation to the investment programme that had been conducted in the Lesnoy town. Further, the defence sought to admit several letters from the Lesnoy Financial Department concerning payment of taxes by promissory notes and their redemption by Yukos. Further, the defence drew the court of appeal’s attention to the items of evidence which had been misinterpreted by the prosecution and subsequently by the trial court.
293.  On 13 September 2005 Ms Moskalenko submitted an additional brief of appeal in which she complained about alleged violation of the European Convention in the course of investigation and trial. In particular, she complained about the impossibility for the first applicant to have confidential contacts with his lawyers in the courtroom during the hearings and in the prison.
294.  On the same date the defence lawyers asked the court of appeal to annul the hearing of 14 September 2005, since the date had been set in a manner that was not in accordance with the procedure prescribed by law.
295.  In all, the briefs of appeal submitted by the defence on behalf of the applicants run to about a thousand pages.
(b)  Representation of the applicants during the appeal proceedings
296.  In July-August 2005, the director of the detention facility persistently refused to grant Ms Khrunova, one of the first applicant’s lawyers, a meeting with him, since the Meshchanskiy District Court refused to issue her with a “meeting permit”. After lodging a complaint with the Judges Qualification Board she was allowed access to the case by the court.
297.  On 22 July 2005 Ms Mikhaylova, who was engaged as the first applicant’s ECHR lawyer in the absence of Ms Moskalenko, was not allowed access to the first applicant by the director of the detention facility. In a letter of 14 January 2008 the then director of the detention facility explained that Ms Mikhaylova had not been admitted to the proceedings in the capacity of the first applicant’s lawyers under Article 53 of the CCrP and was therefore denied access to the first applicant.
298.  On 27 July 2005 Ms Mikhaylova and Mr Prokhorov were denied access to the first applicant by an oral order from the director of the detention facility. The lawyers then submitted a formal written request to visit the applicant, but on 10-11 August 2005 they were again denied access to him, again with reference to Article 53 of the CCrP.
299.  On 4 August 2005 the remand prison administration sent a request to the Meshchanskiy District Court asking whether Ms Mikhaylova and Mr Prokhorov had been admitted to the proceedings as the first applicant’s lawyers. On 11 August 2005 the vice-chairman of the Meshchanskiy District Court replied that those two advocates had not participated in the trial on behalf of the first applicant. On 15 August 2005 the Meshchanskiy District Court submitted to the administration of the remand prison a list of the first applicant’s lawyers who had been admitted to the case under Article 53 of the CCrP and were thus allowed to visit him.
300.  The first applicant had instructed Mr Padva, his lead lawyer, to represent him at the appeal. However, Mr Padva was admitted to hospital shortly before the appeal hearing because of a very serious concern over his health. The hearing on 14 September 2005 was therefore adjourned until 19 September 2005.
301.  On 15 September 2005 Mr Mkrtychev and Mr Drel, the first applicant’s lawyers, tried to meet the first applicant but were denied access to him by the administration of the detention facility. On the same day an inmate suffering from an infectious disease was placed, firstly, in the first applicant’s cell and then transferred to the cell where the second applicant was detained. As a result, quarantine was imposed in respect of the detainees in those cells, including both applicants. However, after lengthy negotiations with the administration of the remand prison, Ms Levina and Ms Moskalenko obtained the right to visit the applicants.
302.  As Mr Padva was still in hospital on 19 September 2005, the hearing was adjourned until 20 September. On 20 September the hearing was again adjourned, on that occasion until 22 September 2005.
303.  On 21 September 2005 the Moscow City Court appointed Mr Shmidt to be the first applicant’s defence lawyer in the appeal proceedings.
304.  On 21 September 2005 Mr Padva was denied access to the first applicant in the remand prison.
305.  On 22 September 2005 the court of appeal ruled that, if Mr Padva was still absent, Mr Shmidt, another of the first applicant’s lawyers, should take his place and represent the first applicant. As a result, Mr Padva discharged himself from hospital so that he could represent the first applicant. Mr Shmidt, who was appointed as the first applicant’s lawyer by the court’s decision, requested an adjournment, but was permitted only a short meeting with the first applicant in the court building, which, in his words, did not allow for confidentiality.
(c)  Appeal hearing of 22 September 2005
306.  The Moscow City Court, sitting as the court of appeal, was composed of three judges: Mr Tarasov (the presiding judge), Mr Marinenko and Ms Lokhmacheva. In total, the hearing on 22 September 2005 lasted about eleven hours.
307.  At the outset of the hearing the defence lawyers requested additional time so that they could take instructions from their clients. Mr Padva explained that he had been refused access to the first applicant on the previous day. Mr Shmidt asked for the hearing to be adjourned for at least one day. The first applicant explained to the City Court that it was imperative he should be given further time to see his lawyers. He also explained that he had been given wholly insufficient time and facilities to prepare for the appeal. The judgment ran to six hundred pages, leaving aside the vast size of the trial record and the documents in the case file, and he had had only two weeks to read them and prepare his comments before the quarantine was imposed.
308.  The City Court refused the applications for an adjournment but granted a period of time to the first applicant to discuss his case with Mr Padva and Mr Shmidt whilst in the courtroom. They discussed the case in presence of the guards.
309.  Mr Shmidt, referring to the breaches of domestic law in assigning the case to the appeal hearing, made an application for the judges to withdraw. However, that application was dismissed.
310.  The appeal court examined several requests by the defence to admit evidence into the case file, including documents lodged earlier in writing and several new requests made orally at the hearing. Thus, at the hearing Mr Padva requested the City Court to admit the report from Giproruda (on the 1994 investment programme for Apatit), the Ernst and Young reports (evaluating the 20 per cent stockholding in Apatit in 1994 and 2002) and the UBRAS report. In reply to that request the City Court held as follows:
 “The court considers that there are no grounds to study the documents which were already studied by the first-instance court. The court will study the applications in which the defence state that the documents were improperly evaluated by the Meshchanskiy Court. That being said, the court accepts the documents for review.”
311.  The City Court heard addresses by the first applicant, Mr Padva, Mr Shmidt (the lawyers) and Mr Shokhin (the prosecutor). The defence enumerated various breaches of procedural law in the course of the trial, as well as substantive inconsistencies in the judgment of the first-instance court. They also asked the City Court to discontinue the proceedings concerning the misappropriation of the NIUIF shares on the ground that by 22 September 2005 the ten-year statutory time-limit established for such crimes had expired.
312.  At the end of the day the City Court retired for one hour and, on the same evening, pronounced the operative part of its decision.
(d)  Judgment of 22 September 2005 by the Moscow City Court
313.  The decision by the Moscow City Court runs to 62 pages. The appellate court did not detect any major breaches of procedural law in the course of the trial. On the merits the court of appeal upheld some parts of the judgment by the Meshchanskiy District Court, while rejecting other accusations or modifying the District Court’s reasoning.
314.  The City Court ruled that the charges concerning non‑payment of personal income tax in 1998 were time-barred. The episode concerning the misappropriation of Apatit profits in 1997-1999 was also time‑barred. As to the NIUIF charges, the City Court held that the time-limit concerning the privatisation of NIUIF would have expired at midnight on 22 September 2005. As a result, the City Court ruled itself competent ratione temporis to examine charges related to that episode, and confirmed the first instance court’s findings in that respect.
315.  The City Court upheld the conviction in the part concerning misappropriation of profits of Apatit in the years 2000-2002, misappropriation of NIUIF shares, corporate income tax evasion in 1999‑2000 (tax cuts unlawfully obtained by the trading companies), personal income tax evasion in 2000, and unlawful tax refund by the trading companies.
316.  As to the first episode concerning corporate tax-evasion (related to the tax cuts) the City Court held in particular as follows:
“[The trading companies] did not own or rent production facilities or fixed assets for processing, storage, or shipment of output in the territory of the ZATO Lesnoy. Employees hired by the firms and registered in Lesnoy were hired exclusively in order to meet the conditions for granting additional tax privileges. Employees residing in Lesnoy were not engaged in preparing documents for entering into agreements, negotiations with buyers or sellers of oil or oil products, or accounting.”
317.  As to the personal income tax evasion the City Court held, in particular, that under the service agreements the amounts received by applicants were in fact paid “for their work at Rosprom, Yukos [Moscow], and foreign companies”. The City Court, in particular, found as follows:
“The facts of issuance of the patent and switch of [the applicants] to the simplified taxation scheme are confirmed by the materials adduced in the judgment and examined at the court, seized at the tax inspectorate documents on the state registration of [the applicants] as entrepreneurs carrying out their activities without setting up a legal entity, service contracts with foreign companies, 1998-2000 income declaration; [the applicants’] applications for patents to switch to the simplified taxation, accounting, and reporting scheme; patents and decisions of the inspectorate heads to issue them; payment receipts for the patents; powers of attorney for representation at the tax inspectorate; entrepreneurs’ income and expense books; and other documents”.
318.  The City Court further found the applicants not guilty in respect of several episodes. Thus, the following charges were dismissed:
(a)  non‑compliance with the commercial court judgments in respect of Apatit and NIUIF (see Section 2 (b) and (e) above, §§ 97 et seq. and §§ 104 et seq.);
(b)  payment of taxes with promissory notes (see Section 2 (g) above, §§ 111 et seq.). In this part the City Court held that it cannot be characterised as “tax evasion” under the new Article 1999, which came into force in December 2003; it also held that payment with promissory notes could not be regarded as “submission of false information” in the fiscal documents, punishable under Article 199 of the Criminal Code. The City Court added that the fact that those actions were not criminal did not affect in any way the District Court’s findings on the civil claims lodged by the Tax Ministry, since such payment of taxes with promissory notes remained unlawful (page 39 of the decision);
(c)  money transfers to Mr Gusinskiy’s companies (the Most Bank episode imputed to the first applicant, see Section 2 (i) above, §§ 115).
319.  As to the pecuniary claims forwarded against the applicants, the City Court held that the amounts of non-paid taxes cannot be recovered from the sham companies; therefore, they should be recovered from the applicants personally, since they were the de facto organisers and beneficiaries of the tax evasion scheme. The judgment of the City Court in this part did not refer to any provisions of the law.
320.  Finally, the City Court changed the legal classification of certain episodes with which the applicants had been charged. As a result, the overall sentence was reduced to eight years’ imprisonment for each applicant. A reasoned decision was delivered by the court of appeal some time later.
321.  On 9 October 2005 the first applicant was transferred from the remand prison.
322.  On 15 October 2005 the first applicant arrived at penal colony FGU IK-10, located in the town of Krasnokamensk, Chita Region. On 20 October 2005 the first applicant’s wife was notified of that by post.
323.  The distance between Moscow and Chita is about 6,320 km by motorway. According to the Government, FGU IK-10 is located about 580 km from the city of Chita. There is a railway line between Chita and Krasnokamensk; the trains have “sleeping wagons” (first-class compartments for two persons) with Internet connection and a dining car. The “transport infrastructure” within Krasnokamensk allowed the visitors to reach the territory of the penal colony.
324.  According to the first applicant, penal colony FGU IK-10 in Krasnokamensk was not quite the furthest penal colony from Moscow but it was the least accessible, because direct flights were available to the colonies further from Moscow. To reach Krasnokamensk from Moscow involved a minimum of two days. It was a long and strenuous journey, made even more difficult by the infrequency of flights from Moscow to Chita. A flight from Moscow to Chita took approximately six and a half hours (occasionally more, when the aircraft had to refuel in Yekaterinburg). On arrival in Chita, there was a seven-hour wait before boarding a train for Krasnokamensk, which took another fifteen hours to arrive. Alternatively, the visitors had the choice of a train ride from Moscow, 106 hours on an uninterrupted run. This made it very arduous for the first applicant’s lawyers and family to gain access to him, and inevitably some of them were not seeing the first applicant as much as they otherwise would. The first applicant’s lawyers described the journey as “very exhausting and debilitating”. Mr Mkrtychev, a lawyer who undertook the journey from Moscow to Krasnokamensk on eight occasions, testified that he had never seen any “sleeping wagons” or a dining car on the trains on which he had travelled. Internet and mobile phone reception were also impossible, contrary to what the Government had maintained. The first applicant further maintained that Krasnokamensk itself was subject to huge extremes in climate. According to Mr Mkrtychev, during his first journey there in October 2005 the temperature was approximately minus ten degrees Celsius, with a freezing and almost unbearable wind. On one of his later visits the temperature dropped to 41 degrees below freezing point. The short summer was equally oppressive, with blistering heat and swarms of mosquitoes.
325.  On 25 October 2005 the first applicant’s wife visited him in the colony. She was entitled to a “long family visit” and stayed with the first applicant until 28 October 2005.
326.  The decision to send the first applicant to the Krasnokamensk colony was taken by the Federal Service of Execution of Sentences – FSIN. On 9 January 2006 the defence lodged a complaint challenging that decision. They claimed that the decision was unlawful and arbitrary. In addition, the first applicant’s lawyers pointed out that the second applicant had also been sent to a very remote region of the Russian Federation, in apparent disregard of the provisions of Russian law.
327.  At the hearing the representatives of the FSIN argued that there had not been enough places in the penitentiary facilities in Central Russia, and that a decision had been taken that five convicts should be sent from Moscow to various regions of Russia. There was no requirement in the law to consider the individual circumstances of each convict; as a result, the first applicant was among the five detainees who had been sent to the Chita Region.
328.  The first applicant in the proceedings referred in particular to the figure mentioned in an interview by the then Minister of Justice Mr Chayka, who said that in September 2005 the admission capacity of Russian colonies was 786,753 places, whereas only 637,079 convicts were detained there. In another interview by Mr Kalinin, the then director of the FSIN, acknowledged that there had been free places in some of the colonies.
329.  On 6 April 2006 the Zamoskvoretskiy District Court of Moscow dismissed the first applicant’s claim and, referring to Article 73 § 2 of the Code on the Execution of Sentences, upheld the FSIN’s decision as lawful and justified. The District Court found that under Article 73 of the Code of Execution of Criminal Sentences a convicted person had the right to serve his sentence in the region where he was convicted or where he had lived before. However, if in that prison there were no places vacant, the detainee could be sent to serve his sentence in the nearest region where it was possible to accommodate him. The District Court referred to a decision of FSIN which defined which colonies must accept convicts from Moscow and in what proportions. According to the District Court, that decision was taken within the competence of FSIN, and did not violate the law. The District Court also held that if the first applicant was placed in a nearer colony the rights of other prisoners might have been violated. The court ruled that information contained in the interviews of Mr Chayka and Mr Kalinin on the number of places vacant in the Russian colonies was inadmissible evidence. On 13 June 2006 the Moscow City Court upheld that decision.
330.  While in the Krasnokamensk colony the applicant first continued to work with his lawyers. However, his contacts with them were seriously limited. Thus, at the beginning of his prison sentence the first applicant was only permitted to see his lawyers at the end of the working day and only one lawyer at a time was allowed to see him.
331.  On 10 November 2005 Ms Terekhova, one of the applicant’s lawyers, was denied access to the first applicant. On 15 November 2005 the colony staff seized documents from Mr Mkrtychev. On 16 November 2005 Ms Levina was subjected to a body search by the colony staff when visiting the first applicant; the procedure of the search involved undressing. On 17 November 2005 Ms Khrunova was also subjected to a similar body search. On 18 November 2005 Ms Terekhova was body-searched on her way to and from the meeting with the applicant, and her professional files were examined. On 23 and 26 November 2005 she was body-searched again in the same manner.
332.  From 29 November to 1 December 2005 the first applicant was visited by three of his lawyers in connection with his application to the European Court of Human Rights. They needed to see the first applicant together but were not permitted to do so. Later the first applicant successfully challenged the prison regulations concerning visits by lawyers. In a judgment dated 25 May 2006 the Supreme Court held that the rule was invalid. However, the colony authorities continued to refuse the lawyers’ access to the first applicant during working hours.
333.  During the meetings with his lawyers the first applicant was separated from them by a screen which ran from wall to wall and floor to ceiling. Such arrangements had been introduced in the penal colony in question since the first applicant’s arrival. The first applicant was not permitted to retain legal documents brought to him by his lawyers on legal visits. The first applicant had a right to copy part or all of a document in his own handwriting in the course of a legal visit. As a result, the first applicant was unable to work with lengthy documents, such as the application before the Court.
334.  In November 2005 the first applicant’s British lawyers, Mr Nicholas Blake and Mr Jonathan Glasson, asked permission to meet him. In February 2006 they applied for a Russian visa, but the Russian embassy did not deliver visas to them for the reasons which remain unknown.
335.  On 11 March 2006 Mr Khrunova’s professional ID was confiscated by the colony staff.
336.  While in the Krasnokamensk colony the first applicant was subjected to a number of disciplinary proceedings regarding his conduct in the colony, which resulted in three periods of solitary confinement for a total of twenty-two days.
337.  On 12 December 2005 the first applicant left his work-place in the sewing shop because his equipment was broken and he needed to find a repair worker. On the following day he was formally reprimanded by the administration for having done so.
338.  On 16 January 2006 the applicant received by post the texts of two regulations by the Ministry of Justice concerning the regime of detention of convicted persons. Those items of mail had passed through the colony censor. On the following day those regulations were seized from the first applicant and on 24 January 2006 the first applicant received a second reprimand for keeping unauthorised printed materials. He was placed in a solitary confinement cell for five days.
339.  On 9 February 2006 the Krasnokamensk Town Court quashed the decision of 12 December 2005 to reprimand the first applicant for absence from work.
340.  On 17 March 2006 the first applicant was subjected to seven day’s confinement in the punishment block for drinking tea in the communal area instead of in a canteen.
341.  On 18 April 2006 the Krasnokamensk Town Court quashed the second reprimand of 24 January 2006.
342.  On 3 June 2006 the first applicant received another reprimand. He was placed in the solitary confinement cell for ten days.
343.  On 27 September 2005 the Moscow branch of the Federal Penitentiary Agency decided to send the second applicant to serve his sentence in a correctional colony FGU IK-3 in the Kharp township situated on the Yamal peninsula (Yamalo-Nenetskiy region, Northern Urals, north of the Arctic Circle). That penitentiary institution was a “strict regime” colony which had a special “ordinary regime” zone. The second applicant lived in that zone.
344.  The distance between Moscow and Kharp is over 3,300 km by road. According to the Government, Kharp township had a direct railway connection with Moscow. Several trains ran on that line, including “Polar Arrow”, a “high-class train. That train had all necessary amenities, including two-bed compartments in “economy” and “business” class, services for children and a restaurant. Further, Moscow had a direct air connection with Salekhard, a nearby town. It was possible to get to Kharp from Salekhard by train or by car, through the town of Labytnangy and across the Ob River.
345.  In the second applicant’s submission, the Government’s argument that there was a direct railway connection with Kharp township and direct flights between Salekhard and Moscow was certainly true. However, the train journey usually took 48 hours, while to reach Kharp from Salekhard airport one had to cross the Ob River: there was a ferry in the summer and an ice-crossing in the winter. In autumn and spring, when there was no ice, the river could only be crossed by air-cushioned vehicles, which was quite dangerous.
346.  On 11 January 2006 Mr Kalinin, the Head of the Federal Penitentiary Agency, stated in an interview that the second applicant had been sent to that colony in order to guarantee his own safety.
347.  On 23 January 2006 the second applicant’s lawyers wrote a letter to the Department of the Federal Penitentiary Agency in the Kaluga region, adjacent to the Moscow region, seeking to obtain information about the number of detainees in the ordinary-regime colony (FGU IK-2) situated in that region. In the letter dated 31 January 2006 the second applicant’s lawyers were informed that the Kaluga colony was capable of accepting up to 50 detainees; however, by 1 October 2005 only 48 people were serving their prison sentence in that colony. Between 1 and 10 October 2005 that number remained the same. Each detainee had 2 square metre of personal space in the colony.
348.  On an unspecified date the second applicant’s lawyers challenged in court the decision of the FSIN. They asserted that the second applicant had the right to serve his sentence in a colony situated in Moscow or in the Moscow region, where he had lived before his conviction. The defendant explained that since Moscow was a capital city, it had no correctional colonies on its territory.
349.  On 16 February 2006 the Zamoskvoretskiy District Court of Moscow dismissed the complaint. The District Court established that there were no appropriate penitentiaries in Moscow; furthermore, it was impossible to accommodate all the convicts from Moscow in the Moscow Region. According to a letter from the head of the Special Register Bureau of the FSIN (byuro spetsialnogo utcheta), it was equally impossible to place the second applicant in correctional colonies in the regions adjacent to Moscow because of overcrowding, repair work, allocation of premises for remand prisons, etc. On 27 August 2003 and 28 July 2005 the FSIN had established quotas for sending convicts from Moscow to other regions of Russia. The quota for the Yamal peninsula was five persons. The fact that the second applicant suffered from certain chronic diseases was not an absolute obstacle to his being sent there. Consequently, the FSIN’s decision to send the second applicant to a colony on the Yamal peninsula was lawful and justified.
350.  On 26 May 2004 the Commercial Court of Moscow ordered Yukos Oil Company Plc to pay taxes totalling RUB 47,989,073,311, fines in the amount of RUB 32,190,430,314 and a penalty in the amount of RUB 19,195,605,923. This award related, in particular, to taxes due by Yukos for the year 2000. The Commercial Court’s award included (but was not limited to it) reassessed taxes for 2000 attributable to the operations of Mitra, Vald Oil, and Business Oil, i.e. three of the four ZATO trading companies that formed the basis for the civil damages award made against the applicants within the criminal proceedings. The Commercial Court found that those companies (along with trading companies registered in low tax zones) had obtained tax cuts unlawfully. The Commercial Court further decided that their operations with Yukos oil had to be treated as operations of Yukos itself, because these companies were nothing more than a “façade” for Yukos, and Yukos obtained all benefits from those operations. Consequently, the Commercial Court imputed the unpaid taxes of those trading companies directly to Yukos (for more details see the judgment in the Yukos case, § 48). The decision of the Commercial Court did not contain a detailed calculation of the amounts due by each trading companies.
351.  Those tax re-assessments were upheld on appeal on 29 June 2004, and on cassation appeal on 17 September 2004.
352.  On 3 October 2006 the Meshchanskiy District Court ordered that the first applicant pay RUB 127,564,727.04 to the Moscow Tax Inspectorate no. 2 in relation to the unpaid personal income taxes.
353.  Over the following months commercial courts examined several other cases opposing Tax Service and Yukos concerning tax underpayments. The majority of the claims by the Tax Service were upheld, which eventually led to the forced sale of the assets of Yukos and its bankruptcy.
354.  In the course of the proceedings against the applicants and shortly afterwards the GPO made several attempts to disbar the lawyers who represented the applicants before the domestic instances and the Court.
355.  Thus, of nineteen lawyers acting for the applicants and in associated cases, twelve have been the subject of disbarment proceedings (Ms Artyukhova, Mr Drel, Ms Moskalenko, Mr Shmidt, Mr Mkrtychev and others). In particular, the GPO sought disbarment of Ms Moskalenko in March 2007 on the basis that her absence from Chita “grossly violated the right of [the first applicant] to defence”. To counter those accusations the first applicant had to make a statement that he was fully satisfied with Ms Moskalenko’s work. Mr Drel was accused of acting in breach of professional conduct by not appearing at a hearing on 14 September 2005. On 23 September 2005 the Ministry of Justice sent a recommendation to the Moscow City Chamber of Lawyers to institute disciplinary proceedings against the lawyers, indicating that they should be disbarred. That same day the press service of the GPO published a demand on the part of the GPO for the institution of disciplinary proceedings and the disbarring of all the first applicant’s lawyers, with the exception of Mr Padva. The demands of the GPO, the Moscow City Court and the Ministry of Justice were subsequently rejected by the Chamber of Lawyers.
356.  In the course of the proceedings the lawyers’ belongings were inspected, and some of the lawyers were subjected to bodily searches involving undressing (Ms Terekhova, Ms Levina and Ms Khrunova); one was detained in custody and left Russia for fear of prosecution. Two lawyers were assaulted by unknown individuals.
357.  In November 2005 the International Protection Centre, which Ms Moskalenko founded, was subjected to a tax audit of the entirety of its activities.
358.  Early in the morning of 23 September 2005, several hours after the appeal court had rendered its judgment, Mr Amsterdam, one of the first applicant’s foreign lawyers, was visited in his hotel room by law‑enforcement officers. Later that day his visa was revoked and he was ordered to leave Russia within 24 hours.
359.  The question of harassment of the first applicant’s lawyers was raised by several former managers of Yukos in the extradition proceedings in which they took part in the United Kingdom (for more details see below). Senior Judge Workman of the London Extradition Court, who examined extradition requests by the GPO, concluded that the first applicant’s lawyers had been subjected to harassment. In particular, he held as follows:
“Mr Shmidt provided me with details of lawyers involved in the cases concerning Mr Khodorkovskiy, Mr Lebedev and Mr Pichugin. Of nineteen individuals, twelve have been the subject of application for disbarment, five have been subjected to searches, two assaulted, one detained in custody and two forced to leave Russia. I share Mr Shmidt’s view that this catalogue defies belief that so many lawyers could coincidentally face so many misfortunes accidentally or by genuine due process of law. I am satisfied that at least some of the lawyers suffered harassment and intimidation”.
360.  Simultaneously with the investigation into the misappropriation of shares and tax evasion the GPO conducted a separate investigation into other facts related to the business activities of Yukos and its managers in 1998-2003. In particular, the applicants were suspected of having embezzled the profits arising from the output of the companies affiliated with Yukos. The applicants were also charged with money laundering.
361.  In 2009 the second case was brought to trial. On 27 December 2010 the applicants were convicted by the Khamovnicheskiy District Court. This conviction was upheld on appeal on 24 May 2011.
362.  On 21 December 2011, the Presidential Council of the Russian Federation for Civil Society and Human Rights submitted a 400-page report on the applicants’ second trial. The report contained contributions from a group of Russian, European and American experts and scholars. None of the expert group found any support for the allegations of embezzlement or money laundering. Having considered the expert reports, the Presidential Council for Civil Society and Human Rights issued a series of recommendations in which, amongst other things, it called for the judgment to be repealed and describing the second case as “a miscarriage of justice”: in particular, the report held that the applicants were convicted for acts that were not directly prescribed by the criminal law and did not contain features of a corpus delicti, as well as without due process. The experts pointed out that the verdict contradicted judgments in other Yukos‑related cases, which have not been overturned, and which subjected Yukos to punitive taxation on oil sales; in this case, the same oil was found to have been stolen, which would have precluded it from being taxed. 4.  Proceedings on extradition of former Yukos managers, requests for legal assistance by the Russian Federation in foreign courts and other Yukos-related proceedings abroad
363.  Some of the applicants’ former colleagues and business partners left for the UK for fear of prosecution (in particular Ms Chernysheva, Mr Maruev, Mr Temerko, Mr Gorbachev, Mr Burganov and others). The GPO lodged requests for their extradition to Russia. All of the extradition requests by the GPO were eventually dismissed by the British courts on the ground that those individuals might not receive a fair trial at home. In particular, in March 2005 Judge Workman, who reviewed one of the extradition requests, concluded that “it was more likely than not that the prosecution of Mr Khodorkovskiy was politically motivated.” The GPO did not appeal against those decisions. A similar conclusion was reached by the Nicosia District Court (Cyprus) in a 2008 extradition case concerning former Yukos managers. On 31 July 2007 Czech High Court upheld the refusal of a lower court to extradite to Russia ex-employee of Yukos, Ms Vybornova. On 31 August 2007 the Vilnius Regional Court refused the extradition of Mr Brudno. Extradition of former Yukos employees and business partners was refused by the Estonian, German and Israeli courts, always with reference to the improper motives of prosecution.
364.  The GPO also requested legal assistance from a number of European countries where Yukos’ assets were presumably held or operations had been conducted. The Swiss Federal Tribunal ordered the Swiss government not to co-operate with the Russian authorities on account of such requests after it concluded that the applicants’ trial had been politically motivated.
365.  In particular, the Swiss Federal Tribunal in its judgment of 13 August 2007 concluded that all of the facts, taken together, “clearly corroborated the suspicion that criminal proceedings have indeed been used as an instrument by the power in place, with the goal of bringing to heel the class of rich oligarchs and sidelining potential or declared political adversaries”. It noted, in particular, that “the political ... nature of the proceedings in Russia was reinforced by the violations of guarantees respecting human rights and the right to a defence” and referred to the the conditions of the execution of the applicants’ sentence.
366.  In September 2010, in Rosinvest Co UK Ltd v. the Russian Federation, the Arbitration Institute of the Stockholm Chamber of Commerce considered the tax claims that had forced Yukos into bankruptcy in the context of a claim by a Yukos shareholder Rosinvest Co. for loss of investments on the basis of a 1989 bilateral UK-USSR treaty for the protection of capital investments. The Tribunal found that the Russian Federation had breached Article 5 of the IPPA, forbidding expropriation of the investments of investors of either Contracting Party. The Tribunal found that “the treatment of Yukos and of Mr Khodorkovskiy changed dramatically after the latter had publicly criticized the Putin administration and after several projects suggested by Yukos seem to have been understood as threatening the government’s control over the Russian petroleum resources”.
367.  The applicants also informed the Court about other litigation before the arbitration tribunals which opposed minority shareholders of Yukos and the Russian Government. In particular, the first applicant submitted a copy of the decision of 20 July 2012 by the Arbitration Institute of the Stockholm Chamber of Commerce in the case of Quasor de Valores, Orgor de Valores, GBI 9000 and ALOS 34 v. the Government of the Russian Federation. In this case the Tribunal found in favour of the investors and concluded, in particular, that tax minimisation schemes employed by Yukos had been lawful, and that the domestic enforcement proceedings against Yukos amounted to a de facto expropriation and were not a genuine attempt to collect taxes.
368.  The applicants’ case attracted considerable public attention in Russia and abroad. In the course of the trial and after it many prominent public figures and influential organisations expressed their doubts as to the fairness of the criminal proceedings against the first applicant and his colleagues. The applicants submitted documents to that effect.
369.  In particular, the applicants referred to statements by several high governmental officials who either directly confirmed or supposed that the applicants had been prosecuted for political reasons (such as Mr Gref, the Russian Economic Development and Trade Minister, Mr Illarionov, President Putin’s Economic Adviser, Presidential Aide Mr Shuvalov (now a First Deputy Prime Minister), the former Minister of Economics Mr Yasin, and Mr Mironov, the Chairman of the upper chamber of the Russian Parliament.
370.  The applicants relied upon the public statements and court testimony of Mr Kasyanov, the Russian Prime Minister at the time of the applicant’s arrest and detention. Thus, in his interview to Echo Moskvy radio station on 27 September 2007 Mr Kasyanov stated as follows:
“There were mistakes, many mistakes, which I am also ashamed of, such as arrest of Mr Lebedev and then of Mr Khodorkovskiy, and start of pressure being put on Yukos ... I know that there are essential facts which the authorities should have presented in court, but which they didn’t present. The ministries, official bodies and various organizations that had anything to do with this case were forbidden to present any documents or facts that may have led people to form a different opinion from the one that was presented to the court by the prosecution. So the court took the only right decision, from the point of view of the authorities”.
371.  In May 2010 Mr Kasyanov was called to testify at the applicants’ second trial at the Khamovnicheskiy District Court in Moscow. In particular, Mr Kasyanov testified about a conversation he had had with President Putin on 11 July 2003, after the arrest of Mr Lebedev. Mr Kasyanov described his dialogue with Mr Putin on that day in the following terms:
“During a break in the meeting I asked Mr Putin again about what was happening with Yukos. At the beginning, Mr Putin, as previously, tried to avoid giving a direct answer, but I was persistent, and after another attempt on my part he answered me that they (meaning [the first applicant] and other owners of Yukos) provided funding not only to Yabloko and the Union of Right Forces (the SPS) which he (Mr Putin) allowed them to provide funding to, but also to communists. And he didn’t allow sponsoring communists. I didn’t say anything in response because I was surprised at what was said. I hadn’t even suspected that statutory-allowed financial support of political parties also needed to be approved confidentially by the President. I didn’t know that Mr Putin had given [the first applicant] permission to fund the SPS and Yabloko. But Mr Putin’s answer left me in no doubt that by funding the communists [the first applicant] had crossed a line so far as Mr Putin was concerned and that the criminal prosecution case of Yukos employees was started exactly because of the funding of political parties not sanctioned by Mr Putin.”
372.  Written depositions of Mr Kasyanov in the same terms were submitted to the Court in 2009. The former Prime Minister also explained that the tax optimisation schemes, which formed a central component of the criminal case against the applicant, had been in conformity with the law at the relevant time. Mr Kasyanov believed that the initial reason for the criminal prosecution of the applicant was the political concern of President Putin and his immediate circle prior to the State Duma election of December 2003. Mr Kasyanov did not think that the criminal prosecution of the applicant had originally been caused by economic reasons, including intent to take over his assets, but that goal appeared subsequently as a concomitant one to the original political goal of removing a political opponent. In the applicants’ words, Mr Kasyanov’s evidence supported that already given by Mr Dubov, a former Duma Deputy.
373.  The applicants also referred to the testimony of senior Yukos executives who had contacts with governmental officials in 2003. Mr Shakhnovskiy testified in 2006 that in 2003 he had met the then Minister of Economy, Mr Gref, who had told him that “the real target of the attack [on the applicants] was the liberal-democratic wing of the government ... and not just Mr Khodorkovskiy himself”. Mr Gref also said that “Mr Khodorkovskiy had placed himself in the firing line by his overt and powerful support for the liberal wing in Russian politics”. Mr Shakhnovskiy also reported on his meeting with the then Minister of Finances, Mr Kudrin, who said, inter alia, that unpaid taxes had been just a pretext used to crush Mr Khodorkovskiy and take away his company. Mr Nevzlin, a former member of the upper chamber of the Russian Parliament and one of the co-owners of Yukos, has testified that in mid-spring 2003 he had been warned by Mr Lesin, the Media Minister, that a political decision had been taken to attack the first applicant and Yukos. Mr Dubov, another major shareholder of Yukos, testified that on 24 October 2003 (the day before the first applicant’s arrest) Mr Surkov (one of the closest aids of President Putin) had said that “all government institutions had been forbidden from having any contact with Open Russia and that President Putin had stated that Yukos was going to be eliminated from the political sphere”. Mr Dyatelev, one of the applicants’ lawyers, gave evidence that a former Tax Minister, Mr Pochinok, was told by Mr Surkov not to give evidence at the applicant’s trial in relation to the tax charges. Mr Ivlev, a lawyer with ALM Feldmans (a law firm working for Yukos), testified that in November 2003 he had met Mr Shuvalov, another aid to President Putin, who had said that there had been absolutely nothing he could do to stop the attacks on the first applicant and Yukos, and implied that decision concerning their fate had been taken at the highest level within the Presidential Administration.
374.  Several international organisations expressed their concern about a possible political underpinning of the first applicant’s criminal prosecution in the first trial (see Resolution 1418 (2005) adopted on 25 January 2005 by the Parliamentary Assembly of the Council of Europe, and the statement of the Committee on Legal Affairs and Human Rights of the Council of Europe’s Parliamentary Assembly adopted on 6 October 2005).
375.  Further, in May 2009 the European Parliament adopted a Resolution on the Annual Report on Human Rights in the World 2008 and the European Union’s policy on the matter, in which it stated that the first applicant was “a political prisoner”.
376.  On 23 June 2009 Mrs Leutheusser-Schnarrenberger, the Special Rapporteur of the Parliamentary Assembly of the Council of Europe published her report, entitled “Allegations of politically-motivated abuses of the criminal justice system in Council of Europe member states”. At a plenary session on 30 September 2009 the Parliamentary Assembly accepted the report from Mrs Leutheusser-Schnarrenberger and unanimously passed a resolution that noted that the applicants’ second trial gave rise to concerns that “the fight against legal nihilism launched by President Medvedev is still far from won”. In her report the Special Rapporteur analysed the new trial as an example of a high profile case involving political motivation.